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TRANSCRIPT
Statement of Accounts
2017-2018
Date Issued: August 2018
CONTENTS
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Page Note Narrative Report 3 Annual Governance Statement 15 Statement of Responsibilities 26 Audit Opinion 28
Main Financial Statements 32 Expenditure and Funding Analysis
Comprehensive Income and Expenditure 32 33
Movement in Reserves Statement 35 Balance Sheet 36 Cash Flow Statement 38
Notes to Main Financial Statements 39
Accounting Policies 39 1 Accounting Standards not yet adopted 53 2 Critical Judgements in applying accounting policies 54 3 Assumptions about the future 55 4 Material Items of Income and Expenditure 56 5 Events after Balance Sheet Date
Note to the Expenditure and Funding Analysis Expenditure and Income Analysed by Nature
56 57 59
6 7 8
Adjustments between Accounting and Funding Basis 60 9 Other Operating Expenditure 63 10
Financing and Investment Income and Expenditure 63 11 Taxation and non-specific grant income 63 12 Property, Plant and Equipment 64 13 Revaluations and Impairments 66 14 Intangible Assets 67 15 Assets held for Sale 67 16
Financial Instruments 69 17 Nature and Extent of Risks of Financial Instruments 73 18 Inventories 77 19 Short Term Debtors 78 20 Cash and Cash Equivalents
Cash Flow Statement - Operating Activities Cash Flow Statement - Investing Activities Cash Flow Statement - Financing Activities
78 79 80 80
21 22 23 24
Short Term Creditors 81 25
Provisions 81 26 Usable Reserves 83 27 Transfers to/from Earmarked Reserves 84 28 Unusable Reserves 86 29 Members’ Allowances 91 30 Officers’ Remunerations 92 31
External Audit Costs 93 32 Grant Income 94 33 Related Parties 94 34 Capital Expenditure and Capital Financing 96 35 Leases 97 36 Termination Benefits 98 37 Defined Benefit Pension Schemes 99 38 Contingent Liabilities 113 39 WYFRA Pension Account 115 Glossary of Terms 119
NARRATIVE REPORT
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Narrative Report
Purpose
The purpose of this statement is to present a picture of the performance of West Yorkshire Fire
and Rescue Authority for 2017/18. The statement fulfils two main purposes; firstly it
demonstrates how the Authority continues to provide value for money by comparing its
operational performance with its financial performance through performance management and
secondly it provides an explanation of the key financial statements with a view to making them
easier to understand.
Background
West Yorkshire Fire and Rescue Authority is the 4th largest Metropolitan Fire and Rescue
Authority in the country serving a population of over 2.2m residents covering an area of 800
square miles, made up of the metropolitan areas of Bradford, Calderdale, Kirklees, Leeds and
Wakefield. The area is diverse both in terms of topography and culture providing fire cover for
the major cities of Leeds and Bradford as well as the ribbon valleys in the Holme and Calder
Valley each providing differing challenges. The Fire Authority is governed by 22 local councillors
who are nominated by the five districts councils with the Labour Party currently the largest
group. It is traditionally a low cost organisation having the third lowest precept at Band D of all
fire and rescue authorities and is proud of its record as a high performing service.
The ambition of the Authority is to ‘Make West Yorkshire Safer’ and it will do this by delivering
A proactive community safety programme
A professional and resilient emergency response service
Provide a skilled workforce that serves the needs of a diverse community
Provide effective and ethical governance and achieve value for money
The Authority has seen significant reductions in its funding over the last 8 years which has
resulted in a major restructure of service provision which, has seen the closure of 11 fire stations
replaced by 7 new builds and a reduction in its establishment of over 200 whole-time firefighters.
Performance and Activity
In 2017/18 the service attended 20 fires requiring 6 fire appliances or more, 13 of these fires
were at occupied premises, 5 were unoccupied permanently, 1 was under construction and the
other, the occupancy wasn’t known.
In terms of overall operational activity for 2017/18 the service responded to 22,445 incidents of
which 10,444 proved to be false alarms, leaving 12,001 actual incidents.
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An analysis of the actual incidents shows the service attended
3,268 property fires
6,127 other fires
571 road traffic collisions
89 flooding incidents
1946 other incidents including special service calls
During these incidents firefighters carried out 1,417 rescues, and dealt with 350 injuries.
In addition to the operational activity the service also provided a proactive fire safety and fire
protection programme using both firefighters and specialist staff. 2017/18 saw the introduction
of the Safer Communities Prevention Strategy where a new Safe and Well visit has replaced the
previous Home Fire Safety Check. The Safe and Well visit is targeted towards those communities
and individuals who are most vulnerable and is much broader than the former Home Fire Safety
Check as it includes an assessment of the factors that create fire risk. Fire risk is often a direct
result of specific lifestyle issues which include smoking, living alone, mobility issues, mental
health, hoarding, poor housekeeping, misuse of alcohol and recreational drugs.
During 2017/18 fire crews and dedicated fire safety teams delivered:-
18,477 homes received safe and well visits
770 school visits
3,833 operational risk visits.
In delivering this service the Authority continues to work with partner organisations from all
sectors of the community including other emergency services, local authorities and the voluntary
sector.
Tragically, despite the work of the service, there were 17 fire deaths in the year, an increase of 9
from the previous year, which demonstrates the importance of maintaining the focus on fire
safety and fire protection.
Detailed performance management reports can be found at www.westyorksfire.gov.uk
Developments
In 2011/2012 the Fire Authority approved a rationalisation of service delivery which would
involve the disposal of 11 older fire stations to be replaced by 7 new stations which will deliver
ongoing revenue savings of over £31m per annum to manage the reductions in central
government grant.
June 2017 saw the opening of a new fire station at Shipley which resulted in the closure of both
Idle and Shipley fire stations. The Authority was able to agree a mutually beneficial land swap
with Incommunities enabling the Authority to site the station in an optimum location and release
land in Saltaire and Idle for community housing. The station build has been funded through the
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Authority’s capital plan using a combination of borrowing and capital receipts from the sale of
land. A further significant development during the year has been the reintroduction of whole-
time firefighter recruitment for the first time since 2009. The first recruit’s course started in
January 2018 and there are further courses in May and September 2018 and January 2019
resulting in the addition of 96 new fire fighters in West Yorkshire.
Financial Performance
West Yorkshire Fire and Rescue Authority remains proud of its record as a high performing, low
cost organisation and has continued to demonstrate these qualities in 2017/18 despite facing a
number of major challenges.
Local Government Finance Settlement
As part of the 2015/2016 Local Government Finance settlement the Government provided
details of the proposed settlement for the following four years allowing Authorities to secure the
long term settlement by submitting a 4 year efficiency plan. The settlement showed a reduction
in grant of £7.9m by 2019/2020 with £3.3m lost in 2017/18. The Authority considered its budget
options and approved a precept increase of 1.99% supported by a savings package totalling £1m.
Revenue Outturn
Revenue Outturn in 2017-18 was £79.392m a breakdown is provided in the table below. Mid way
through the financial year it became apparent that some of the assumptions underlying the
calculation of the 2017/18 budget had changed which resulted in £550k being transferred to
reserves before the end of the financial year. Also, in order to identify the fact that the fire
fighters pay award had not been settled during the year an interim payment of 1% was paid, an
additional 1% pay award was charged to 2017/18 to recognise the original offer by employers of
2%. This will be transferred from the contingency for pay and prices to the revenue account once
the final settlement has been agreed.
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The revenue budget under spend in 2017/18 was £257k which is summarised in the table below;
Budget Description Outturn Revised Budget Variance
£ £ £
000's 000's 000's
Uniformed Staff 51,448 51,679 -231
Support Staff 8,835 9,000 -165
Other Employee Expenses 971 1,383 -412
Premises Expenses 3,872 3,583 289
Transport Costs 2,092 2,303 -211
Supplies and Services 4,904 4,629 275
Insurance 889 889 0
Lead Authority Charges 227 293 -66
Capital Financing Charges 6,918 6,918 0
Provision for Pay and Prices 1,362 1,362 0
Transfers to Reserves 550 0 550
TOTAL EXPENDITURE 82,068 82,039 29
TOTAL INCOME -2,676 -2,390 -286
NET EXPENDITURE 79,392 79,649 -257
Uniformed Staff -£0.231m
This is the largest area of expenditure. The breakdown is as follows:
Whole-time Firefighters -£182k
The underspending in this budget is due to two factors:
a) There has been an increase in the number of leavers in the year than was predicted
in the original budget.
b) This has been offset by a charge to the whole time firefighters budget of £352k which
is a provision for the outstanding pay settlement in 2017/18 which was still to be
finalised at the 31st March 2018
Retained firefighters -£24k
The underspend in 2017/18 is due to an under spend on payments on turnouts and retaining
fees which has been offset by a £11k charge for the pay award provision.
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Control Staff -£25k
The underspend is due to lower allowances and pension contributions than was budgeted which
has been offset by a £11k charge for the pay award provision.
Support Staff -£165k
This underspending is a result of a number of vacancies in support staff budgets. When a post
becomes vacant from the date it becomes vacant to the date of employment can take several
months.
Training Courses -£422k
This is a budget that has traditionally experienced under spending in previous years, the main
reason for this are either the lack of availability for staff to attend courses or the lack of suitable
courses. The ability to respond safely to emergencies is not jeopardised by this situation.
Other Employee Expenses £10k
Expenditure in 2017/18 is in line with budget provision
Premises £289k
The overspend is due to over spending on property repairs of £375k which is combination of
increase in the cost of labour and parts and an increase in inspections and compliance checks
due to statutory regulations and revised health and safety legislation. This has been offset by a
£123k under spend in property rates which is attributable to the reduction in the number of fire
stations.
Transport -£211k
During 2017/18 there have been two large underspends of £118k in vehicle fuel which is due to
the use of more efficient vehicles and £102k in vehicle leasing which represents a reduction in
the Authority’s fleet. There have also been under spends in tyre purchases and spare parts.
There is also a cost of £180k included within transport related costs which is for the maintenance
of our National Resilience vehicles, this is funded by government by the way of grant which is
shown against our income budget.
Supplies and services £275k
The overspend in 2017/18 can be attributable to a number of factors, the most notable are
a) The purchase of new improved female fire fighter uniforms
b) Training equipment and improvement to facilities for the recruits course which
commenced in January 2018.
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c) A provision of £189k for the amount owing for SAP licences for our existing HR system
which is currently in dispute.
Lead Authority Charges -£66k
The under spending on lead authority charges which is in respect of service level agreements
both with Kirklees Council for the provision of financial services and West Yorkshire Pension Fund
for the administration of the pension schemes is due to an overprovision of budget in 2017/18.
Transfers to Reserves £550k
As explained earlier in the report £550k of realised budget under-spending was transferred to
the contingency for pay and prices mid-way through the financial year.
Income -£286k
The Authority has generated additional income through a number of areas in fire safety including
charges for persistent false alarms, fire reports and the primary authority scheme. The income
also includes the government grant of £180k to fund the maintenance of the National Resilience
vehicle costs as explained above.
General Fund Balances
At 1 April 2017 the Authority had a balance on the general fund of £14.6m (Excluding Earmarked
Reserves) which has been accumulated through underspending in the previous years. The
Authority had planned to use £0.953m of balances to fund the revenue budget but ultimately
underspent the budget by £0.257m. In addition, in order to recognise a potential funding gap of
the Emergency Services Mobile Communications Programme (ESMCP) after 2020, an earmarked
reserve was established resulting in a transfer of £0.258m from the general fund reserve to the
new ESCMCP earmarked reserve. A central government grant, namely the Business Rates
Retention Autumn Statement grant was higher than that indicated by the five district councils in
2017/18, this additional income has subsequently been transferred from the General Fund to the
Business Rates Appeals earmarked reserve to recognise that this funding may have to be repaid.
These three adjustments mean the General Fund Reserves balance at the 31 March 2018 is
£14.4m (excluding Earmarked Reserves).
The Authority has calculated that it needs to maintain a minimum revenue balance of £5m to
meet uninsured risks which are identified in the corporate risk register, which leaves useable
balances of £9.4m.
The 2018/19 revenue budget and medium term financial plan will commit further use of
balances to enable the Authority to fund the current recruitment programme, enable
investments in property contract management, ICT improvements and a review of the retained
duty system. The government announced in the March 2016 Budget that there would be a
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review of the discount rate used to calculate the employers contribution for the fire fighters
pension schemes which is due to take effect in 2018/19. The effect of this will be an increase in
employers pension contribution costs which will be funded by the use of reserves, the results of
this review are expected in summer 2018.
The Authority continues to face significant financial challenges as funding for public authorities
continues to be reduced. The use of the general fund reserve will enable the Authority to
achieve these financial challenges whilst recommencing recruitment of whole-time firefighters.
Details on all the Authority’s reserves are detailed in Notes 27, 28 and 29 to the accounts.
Capital Expenditure Outturn
The Authority spent £6.57m on capital during 2017/18 out of an approved capital plan of
£12.81m, details of expenditure by directorate is shown in the table below. The underspend is
due to the timing of the capital schemes and the budget for schemes with committed
expenditure will be slipped in to 2018/19.
Directorate Outturn Capital Plan
2017/18 Variance
£ £ £
000's 000's 000's
Property 1,473 2,242 -769
IRMP 779 3,675 -2,896
Information Communications and Technology
571 1,634 -1,063
Human Resources 79 223 -144
Transport 2,394 2,647 -253
Operations 750 1,783 -1,033
Fire Safety 462 500 -38
Finance 64 109 -45
TOTAL 6,572 12,813 -6,241
Of particular significance was:
1. The building of a new fire station at Shipley which replaces the former Idle and Shipley
fire stations as part of the Authority’s IRMP.
2. Refurbishment of the Fire Service Headquarters Training Facilities which included a new
training tower, drill ground water supply and new facilities for the recruits training
course.
3. The purchase of 6 fire appliances and 6 flood response vehicles
4. An update of the incident ground communications equipment and lance firefighting
equipment.
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This expenditure has been funded through three main sources as detailed below
Capital receipts £3.300m
Capital Finance Reserve £0.756m
Internal borrowing £2.424m
Over the last 5 years the Authority has been using its capital investment plan as a means of
generating long term revenue savings. In 2010/2011 and 2011/2012 the Authority approved
capital investment of over £30m to replace 11 existing fire stations with 7 new build stations.
These schemes have enabled the Authority to reduce the whole-time firefighter establishment
by over 200 posts which will generate annual savings of over £6m per year. In addition, the land
released from the old sites since 2014 has generated capital receipts of £4.21m which has been
used to support the capital programme.
Explanation of the Financial Statements
Statement of Responsibilities
The Statement of Responsibilities for the statement of accounts sets out the respective
responsibilities of the authority and the Chief Finance and Procurement Officer.
This is followed by the Auditors report which gives the external auditor’s opinion on the financial
statements and the authority’s arrangements for securing economy, efficiency and effectiveness
in the use of resources.
Core Financial Statements
Expenditure and Funding Analysis
This is a new statement which was included in public sector accounts for the first time in
2016/2017. The expenditure and funding analysis helps to explain the difference between the
way information is reported during the year in the form of budget monitoring reports to
directors and the statutory reporting format required for the final accounts which is shown in the
comprehensive income and expenditure statement. The bottom line on the expenditure and
funding analysis shows that the general fund and other earmarked reserves at the end of
2017/18 total £35.74m.
Movement in Reserves Statement
This shows the movement in the year of the different reserves held by the Authority. These are
broken down between useable reserves which are those which can be used to fund expenditure
or reduce local taxation and unusable reserves which cannot. Examples of useable reserves are
the General Fund Balance and the pension fund equalisation reserve; these are useable because
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they have been created by setting aside funds. Example of unusable reserves include the
pension reserve and the capital adjustment account, these are unusable because they are
created by an accounting adjustments and not backed by funds. The total value of useable
reserves has increased by £3.161m to £35.743m, whilst the deficit of unusable reserves has
increased by £12.706m principally as a result of the future lifetime cost of the firefighter pension
scheme.
Comprehensive Income and Expenditure Account
From 2016/17 local authorities were no longer required to report based on the service expenditure analysis in the Service Reporting Code of Practice (SeRCOP) but to report on the same basis as the Authority's budget and performance monitoring reports. This new format means that the service section of the comprehensive income and expenditure statement supports accountability and transparency as it reflects the way in which services operate and performance is managed.
However, this is perhaps the most misleading of the accounts because it does not show the cost
to the tax payer of providing the service as its title might suggest. What this statement does
show is the cost of providing services in the year in accordance with ‘generally accepted
accounting practices’ which require the inclusion of a number of large transactions which do not
involve the movement of cash. These include charges for depreciation and variations in the
estimated future cost of pensions. As a result of these adjustments it is not possible to identify
the cost of the service to the tax payer from this statement. Details of the cost of the service and
how this is funded through grant and council tax is shown in the revenue outturn section of the
report.
Balance Sheet
This statement shows the value of the Fire Authorities assets and liabilities on 31 March 2018
and includes the figures at 31 March 2017 for comparison. It then shows how the net assets are
matched by the Authority’s reserves (both useable and unusable). On examination, the Balance
Sheet shows the Authority having net liabilities of £1.328m however this includes the liabilities
under the unfunded Fire-Fighters pension schemes totalling £1.394bn which the Authority is
required to include. These represent the total future lifetime cost of pension liabilities for all
existing employees and pensioners. However, these liabilities are met through contributions
from the employer and the employees with the balance met through government grant.
Consequently, the Authority will not be required to meet the whole of this liability in future
years. If these are excluded from the balance sheet it shows net assets of £66m.
Cash Flow Statement
The Cash Flow Statement shows the changes in cash and cash equivalents of the authority during
the reporting period. The statement shows how the authority generates and uses cash and cash
equivalents by classifying cash flows as operating, investing and financing activities. The amount
of net cash flows arising from operating activities is a key indicator of the extent to which the
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operations of the Authority are funded by way of taxation and grant income or from the
recipients of services provided by the authority. Investing activities represent the extent to which
cash outflows have been made for resources which are intended to contribute to the authority’s
future service delivery. Cash flows arising from financing activities are useful in predicting claims
on future cash flows by providers of capital (i.e. borrowing) to the authority.
The closing balance of cash of £4.149m can be seen on the Balance Sheet by deducting the bank
overdraft in current liabilities of £0.470m from the cash and cash equivalents in current assets
totalling £4.619m.
Pension Fund Statement
This statement provides details of income and expenditure on firefighter pensions. There are
currently 4 different pension schemes none of which are supported by an investment fund.
Details of these can be found in note 38 to the statement of accounts.
Looking Forward
Local Government Finance Settlement
The Authority received details of the Local Government Finance Settlement covering the next 4
years spending review period on 9 February 2016 showing further grant loss of £3.3m in 2017/18
and an overall loss of £7.9m per year by 2019/2020. Along with the settlement was an offer
from the Secretary of State enabling authorities to fix the 4-year settlement by agreeing to
submit efficiency plans to meet the 4 year budget deficit which the Authority submitted and
were duly approved.
As part of the Local Government Finance Settlement 2018/19, the government launched the Fair
Funding Review whose aim is to address the relative needs and resources of the funding
allocation to local government and the fire service. This will form the basis of the next spending
review which will take effect from April 2020, the financial effect on fire and rescue services at
the present time is unknown.
Pay Awards
The Government lifted the pay cap on public sector pay in autumn 2017 which means that
employers are not limited to pay awards at 1%. There is increasing pressure from trade unions to
increase pay by above inflation pay awards. The fire fighters pay increase is still in dispute and an
interim 1% pay award was paid in December 2017, even though 2% was originally offered by the
employers in summer 2017. If the final pay award is in excess of the 2% that is budgeted within
the Medium Term Financial Plan, this will mean the Authority will need to identify revenue
savings and/or the use of balances in the short term.
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Recruitment
The reductions in public sector finance have meant that the Authority has not recruited whole-
time firefighters since 2009. This was not sustainable in the longer term as the number of
operational employees declined, so, the Authority approved a recruitment programme resulting
in the appointment of 24 whole time firefighters in January 2018. A further three recruits courses
of 24 per course are planned in 2018/19. In order to facilitate this investment in employees the
Authority has committed to use £5.1m of balances over the next two years to fund the
recruitment programme.
ICT Strategy
The Authority is in the process of implementing the IT strategy which will involve major capital
investment in the IT infrastructure and a restructure of service delivery.
Fire and Rescue National Framework for England
The Fire and Rescue National Framework for England provides the overall strategic direction to
fire and rescue authorities in England. This was last revised in 2012 and following public
consultation by the Home Office the updated framework will come into effect on the 1st June
2018. The changes coming into effect are
a) New guidance on how fire and rescue authorities should work with the National Fire
Chiefs Council (NFCC) and Her Majesty’s Inspectorate of Constabulary and Fire and
Rescue Services (HMICFRS)
b) Changes in guidance which reflects legislative changes to allow mayors and police and
crime commissioners to exercise the functions of a fire and rescue authority
c) Development and delivery of professional standards for fire and rescue authorities
d) Workforce development
e) Changes to encourage commercial transformation, leading to further collaboration,
innovative thinking and sharing of best practice.
Fire and Rescue Authorities have a statutory duty to have regard to this framework.
Inspection
The Home Office as part of the reform agenda has introduced an inspection regime which will be
carried out by Her Majesty’s Inspectorate of Constabulary and Fire and Rescue Services
(HMICFRS). There are three strands to the inspection namely, efficiency, effectiveness and
people. The process will go live in June 18 and all 45 fire and rescue services in England will have
been inspected by summer 2019. West Yorkshire Fire and Rescue were one of three authorities
chosen to take part in a pilot inspection which was undertaken in May 2018. The authority will
have its full inspection in the last tranche in spring 2019.
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Summary
Once again the future of West Yorkshire Fire Authority will be challenging, however, the track
record of the Authority over recent years, coupled with the stability offered by the 4 year
settlement and the reintroduction of whole-time firefighter recruitment, suggest that the future
may offer some optimism
ANNUAL GOVERNANCE STATEMENT
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Annual Governance Statement
Scope of Responsibility and Code of Corporate Governance
Corporate governance is a phrase used to describe the systems and procedures that are in place
to ensure that business is conducted in accordance with the law and proper standards, and that
public money is properly accounted for and used economically, efficiently and effectively.
The Authority has a duty to achieve best value in the way it functions and to ensure that
arrangements are in place to secure continuous improvement in all areas of service provision.
The Authority has set out its arrangements for the governance of its affairs in its Constitution (a
copy of this can be found at www.westyorksfire.gov.uk) which includes the Authority’s Code of
Corporate Governance which is consistent with the principles of the CIPFA / SOLACE Framework
Delivering Good Governance in Local Government.
In publishing this statement the Authority fulfils the requirement under regulation 4(2) of the
Accounts and Audit Regulations 2015, and accompanies the 2017/18 Statement of Accounts.
It is a requirement to produce this statement under regulation 6(1) b of the Accounts and Audit
(England) Regulations and that it is approved by Audit Committee in advance of them agreeing
the Statement of Accounts.
By applying the principles within the Authority’s own Code of Corporate Governance and
applying the Nolan Principles of Standards in Public Life, the Authority commits to deliver its
services with integrity, accountability, transparency, effectiveness, and inclusivity.
The Purpose of the Governance Framework
The governance framework comprises systems and processes, and cultures and values, by which
the Authority is directed and controlled. It enables the Authority to monitor the achievement of
its strategic objectives and to consider whether those objectives have led to the delivery of
appropriate, cost effective services.
The Authority acknowledges that it can never eliminate risk entirely from its operations and this
statement explains the systems used to manage this risk to a reasonable level, a key element of
which is the system of internal control.
The governance framework has been in place at West Yorkshire Fire and Rescue Authority for the
year ending 31 March 2018 and will remain in place up to the date of the approval of the
statement of accounts.
The Governance Framework
Summarised below are some of the key elements of the governance framework:
ANNUAL GOVERNANCE STATEMENT
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Strategic Objectives and the Service Planning Process
The Authority’s Ambition, Aims and Priorities are set out in its 2015-2020 Service Plan. This plan
is supported by the Integrated Risk Management Plan and the Medium Term Financial Plan, all of
which are reviewed and approved annually by the Authority. All these plans are published on
the website at www.westyorksfire.gov.uk. The Authority’s Ambition, Aims and Priorities are:-
Ambition: ‘Making West Yorkshire Safer’:-
Aim: ‘Provide an Excellent Fire and Rescue Service working in partnership to reduce death,
injury, economic loss, and contribute to community well-being’
Priorities:
• Deliver a proactive community safety programme
• Deliver a professional and resilient emergency response service
• Provide a safe, skilled work force that serves the needs of a diverse community
• Provide effective and ethical governance and achieve value for money.
These objectives are set out in the Authority’s Service Plan which is published on the Authority’s
website. These objectives form part of area plans, departmental plans and station plans. There
is an on-going system of monitoring and reporting achievement of the service Authority against
its corporate aims with regular reports on progress monitored by senior management and the
Authority through its committee structure. Copies of the plan are distributed to all fire stations
and departments of the Authority.
The Internal Control Environment
Internal Control describes the systems and processes that ensure the Authority is able to achieve
its objectives with integrity and in compliance with laws, regulations and its own policies. They
define the decision making processes and the controls that are in place to monitor these
processes. The fundamentals include making sure that decisions are taken at the correct level
and that there are clear separations of duty within the decision making processes.
It covers the reliability of financial reporting and performance management against the
achievement of the Authority’s strategic goals.
The Authority’s systems of internal control conform to the standards of financial governance set
out in CIPFA statement of the role of the Chief Financial Officer in Local Government.
The Constitution
The Authority has a written constitution which is reviewed annually by the Chief Legal and
Governance Officer and is formally approved by the Authority at its Annual General Meeting. It
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is published on the website at (www.westyorksfire.gov.uk) and is included within the body of
evidence which supports this statement. This document forms the basis of the Governance
Framework and sets out the way the Authority is governed and is made up of the following
documents:-
• Authority committee standing orders and procedures
• The roles and responsibilities of the executive officers
• Access to information rules
• Contract standing orders
• Financial procedure rules
• Anti-fraud and corruption strategy
• Code of corporate governance
• Members’ code of conduct
• Officers’ code of conduct
• Member v officer relations protocol
• Officers’ employment rules
• Protocol regarding the use of Authority resources by Members
• Members’ allowances
• Management structures
• Officer delegation scheme
• Complaints procedure
• Whistle blowing policy
The Committee Structure
The constitution sets out the Framework under which the Authority is governed. It sets out in
detail the composition of the Authority, the role and functions of the elected members, the roles
and responsibilities of designated office holders and the roles, functions and terms of reference
of the Authority and its Committees.
The Authority has four standing committees each of which, along with the Authority, meet 4
times per year and an executive committee which deals with urgent business:-
ANNUAL GOVERNANCE STATEMENT
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Human Resources Committee (11 Members)
This committee deals with all issues relating to the employment of staff including conditions of
service, industrial relations, equal opportunities and training.
Finance and Resources Committee (11 Members)
This committee is responsible for all issues relating to the Assets of the Authority. This includes
Finance (including recommendation to the Authority in relation to the revenue budget, capital
planning and precepts), Insurance, Treasury Management, buildings, land and property, and IT.
This committee receives regular reports on the financial performance of the Authority along with
detailed updates on treasury management activity.
Audit Committee (6 Members)
This committee is established in accordance with CIPFA guidance ‘Audit Committees – Practical
Guidance for Local Authorities’. In addition to all matters relating to both internal and external
audit, the committee is responsible for performance review and risk management and business
continuity.
Community Safety Committee (11 Members)
This committee is responsible for the oversight of all aspects of service delivery, which includes
the key areas of emergency response, fire protection and fire prevention. This covers
responsibility for integrated Risk Management Planning, national resilience support
arrangements and shared services.
Executive Committee
The Executive Committee of 6 members which deals with any urgent matter.
The terms of reference of all the Authority’s committees are available on the Authority’s website.
All meetings are open to the general public and wherever possible items are considered within
the public sessions of the meetings. Copies of reports and minutes of all meetings are published
on the Authority’s website.
Management Structure
The Corporate Management Board is made up of the following Executive Officers who meet
monthly:
• Chief Executive/Chief Fire Officer
• Director of Service Support
• Deputy Chief Fire Officer / Director of Service Delivery
• Chief Legal and Governance Officer
ANNUAL GOVERNANCE STATEMENT
Page 19 of 126 WYFRA
• Chief Finance and Procurement Officer
• Chief Employment Services Officer
The Corporate Management Board is supported by a Management Team which, in addition to
the Board members, includes senior officers from both the operational and non-operational
sides of the organisation.
There is a close interaction between management and elected members based around a formal
briefing process prior to each committee. Management also provide training and briefings for
the elected members prior to their consideration of key issues such as the Medium Term
Financial Plan and the Integrated Risk Management Plan.
The Chief Executive’s Strategy Group, consisting of Management Board members and the Chair
and Vice Chair of the Authority, meet bi-monthly. The purpose of this group is to allow senior
management and the political leadership to consider major issues affecting the Authority and the
Fire Service as a whole. Leading elected members from the opposition are invited to attend the
meeting when key issues, including the budget, are being discussed.
Tri-service Collaboration Board.
The Policing and Crime Act 2017 placed a duty on Fire and Rescue Authorities to collaborate with
the other emergency services to provide increased efficiency and improve service delivery. The
tri-service collaboration board has been established with West Yorkshire Police and Yorkshire
Ambulance Service to identify areas where this can be achieved. The Board consists of the key
political leaders of the organisations including the Chairs of the Fire Authority and Yorkshire
Ambulance Service and the Police and Crime Commissioner supported by members of senior
management. In 2017, the Authority entered into a formal written agreement in accordance with
the Act which formally regulates the relationship between the three parties.
These are the key elements which make up the Governance Framework. Other areas of
governance including officer and member training and development, communication strategy
and examples of the performance management. Structure is available on the Authority website.
4. Review of Effectiveness
The Authority has responsibility for conducting, at least annually, a review of the effectiveness of
its governance arrangements. The review process is on-going and is informed by the work of the
Management Board, the Chief Finance and Procurement Officer, Internal Audit, External Audit
and other external assessors. The results of the reviews are reported to the Authority through
the committee structure.
ANNUAL GOVERNANCE STATEMENT
Page 20 of 126 WYFRA
A self-assessment of our effectiveness:
• Integrated Risk Management Planning (IRMP)
The Authority is systematically reviewing the service it provides throughout the county through
the IRMP process. This process aims to improve community safety and wellbeing and reduce the
risk of fires in homes. The Authority maintains a community risk matrix which breaks down the
county into different areas based on a risk categorisation from low to very high. This information
allows the Authority to measure service delivery to make sure that it is line with the level of risk.
This information has informed the Risk Management Plans which have transformed service
delivery over the last 6 years.
Through this process, the Authority is able to continue to achieve its aim of making West
Yorkshire safer with its reducing resources.
• Effective Performance Management
It is important that the Authority is able to measure its performance against its aims and
objectives. The Authority has a well-established performance management structure which is
focused on outcomes. The system is embedded throughout the organisation from individual Fire
Station level through District Command to Authority wide achievement.
Each year the Authority produces district risk reduction plans which set service delivery priorities
and targets for the coming year. The targets are challenging, outcome based and are designed to
build on the success of the previous year. The service delivery framework, coupled with the
service delivery plans, has already proved to be successful in targeting the Authority’s resources
where the risk exists throughout the five districts.
Performance against the service delivery plan is monitored by the Management Board and
Management Team with reports on performance presented to each meeting of the Community
Safety Committee where each of the District Commanders attends to be challenged by the
members of the Committee.
This system of monitoring has proved successful in measuring performance and provides the
vital evidence needed to support the Integrated Risk Management Plan.
• Effective Financial Planning and Management
The Government’s austerity measures have seen the Fire Authority lose £26m in government
grant from the start of the spending review in 2011/12 to the end of 2019/20. The Authority has
from the start taken a strategic approach to this grant loss matching changes to service delivery
through the Integrated Risk Management Plan to the reducing resources. This planning coupled
with significant capital investment has seen the construction of 7 new fire stations to replace 11
old fire stations delivering over £31m in ongoing revenue savings.
ANNUAL GOVERNANCE STATEMENT
Page 21 of 126 WYFRA
In 2016/2017 the Authority received Home Office approval of its 4 year efficiency plan which
secured the 4 year settlement to 2019/20 which resulted in further grant loss of £7.9m. This has
offered a degree of certainty over funding to 2020 allowing the Authority to develop a strategy
for the use of balances linked to its precept strategy.
The finance team have developed a comprehensive expenditure monitoring system delivering
financial information and forecasts from individual cost centre level through the organisation to
senior management and the Fire Authority. The establishment of a new capital accountant post
has seen the introduction of similar levels of detailed financial information for all capital
schemes.
The authority maintains a strong record of financial management which is evidenced by its track
record of maintaining expenditure within the approved budget.
• Effective Arrangements for Accountability
The Authority can demonstrate robust systems of accountability both to elected members and
the general public. The district command structure, which mirrors the 5 local authorities / district
boundaries in West Yorkshire, provide for close interaction with the local district councils on
service delivery and joint working.
The Authority presents its budget proposals to the district councils and provides representatives
of the business community with the opportunity to comment on the budget proposals.
• Internal Audit
The Authority procures its internal audit service from Kirklees Council which complies with Public
Sector Internal Audit Standards. This not only provides better value for money but also gives the
Authority access to specialist auditors and gives an added element of independence.
The work of internal audit extends well beyond the normal probity audits and includes
examination of the key financial systems as well as verification work on the Authority’s business
continuity plan. During 2017/18 the Internal Audit section provided an independent review role
within the new command and control project implementation and overview to the Emergency
Services Mobile Communications Project.
• Human Resources
Work has continued to align people policies and practice to business need. As well as updating
core policies, a second full staff survey has been carried out. This has resulted in the refresh of
the Authority’s values and the introduction of a new behavioural framework designed to further
improve staff engagement. Organisational development work will be undertaken over the next
year to try to ensure that the values and behaviours are truly embedded in the organisation and
form part of our leadership practice.
ANNUAL GOVERNANCE STATEMENT
Page 22 of 126 WYFRA
Recruitment of whole-time firefighter’s campaign commenced in February 2016 and culminated
in over 6,000 applicants for some 70 posts that will be available during 2017/18. An extensive
positive action campaign has ensured that there is real diversity amongst the applicants.
Unfortunately, this diversity was not reflected in the final recruitment decisions with both female
and BME applicants struggling with the testing requirements. A further review of those
requirements has been undertaken in advance of the 2018/19 recruitment programme.
The Authority continues to prioritise the health and well-being of its staff. A 24 hour Employee
Assistance Programme is in place to provide staff with an additional level of support. Sickness
levels across the Authority remain low.
Summary
This process of self-assessment provides the Authority with the evidence to support
Managements’ conclusion that it is continuing to provide a high quality service with the
resources available.
• Statement of Assurance
The Authority is required to produce an annual Statement of Assurance as part of the Fire and
Rescue National Framework for England. The purpose of the statement is to provide
independent assurance to communities and the Government that the service is being delivered
efficiently and effectively. Whilst the Fire and Rescue National Framework sets out the
Government’s priorities and objectives for fire and rescue authorities in England, it does not
prescribe operational matters as these are determined locally by fire and rescue authorities.
This Statement of Assurance provides assurance that WYFRA is providing an efficient, effective
and value for money service to the community of West Yorkshire in its financial, governance and
operational matters.
• Conclusion
Overall, the Authority and its Management Board conclude that the systems and procedures
provide effective systems of management control enabling the Authority to provide and
efficient, effective and economic service to the public of West Yorkshire.
• External Review
KPMG continue to provide an external review of systems and procedure as part of their role as
the appointed external auditors to the Authority, they will continue to do so until the completion
of the 2017/18 accounts. Following the Public Sector Audit Appointments tender process,
Deloitte will become the Authority’s external auditors from 1st April 2018.
ANNUAL GOVERNANCE STATEMENT
Page 23 of 126 WYFRA
In addition The Policing and Crime Act 2017 included the establishment of a Fire Service
Inspectorate which will perform independent reviews on all Fire and Rescue Services. The
inspection will review the efficiency, effectiveness and people within the organisation. West
Yorkshire is one of three fire services who have been chosen to pilot the new inspection regime
which will commence in May 2018. The Authority’s full inspection as part of the formal regime
will take place in spring 2019.
• Compliance
These systems and reviews demonstrate that the Authority’s assurance arrangements conform
to the governance requirements of the CIPFA Statement on the Role of the Head of Internal
Audit (2010). They also demonstrate the systems that are in place to enable the Monitoring
Officer and Chief Finance Officer to discharge their functions in relation to the governance of the
Authority.
• Significant Governance Issues
The continuing reduction in government funding remains a significant challenge to the Authority
as it continues to maintain service standards with reducing resources. In addition, the potential
for changes in the governance of the Authority also provide a degree of uncertainty.
• Grant Loss
Whilst the Authority has agreed to accept the Governments offer of a four year funding
settlement to 2019/20 as per the efficiency plan, there still remains a funding gap over the
medium term. The current programme of station rationalisation will not deliver all the required
savings and further interventions will need to be identified, as a result the Authority will be using
reserves to support the revenue budget in the short term until these are realised.
The Government as part of the Local Government Finance Settlement 2018/19 commenced a
review of how local government which includes fire and rescue services are funded. This Fair
Funding Review will set new baseline funding allocations delivering an up to date assessment of
their relative needs and resources. This means that the financial position of the Authority will
remain unclear until this review has been completed.
This coupled with the potential impact of ‘Brexit ‘means that the Authority should be prepared
for further financial restraint in the next spending review period.
• Assumptions Underpinning the Medium Term Financial Plan
The assumptions made in the medium term financial plan, particularly around savings, inflation,
pay awards, employer pension contributions, income from council tax and business rates whilst
based on the best information available, are subject to change from economic circumstances and
public finances in general. This represents a potential risk to the Authority’s Medium Term
Financial Plan and any adverse effects will mean that the Authority will have to find further
ANNUAL GOVERNANCE STATEMENT
Page 24 of 126 WYFRA
savings or use reserves. Budget monitoring and forecasting processes are in place which enables
the Chief Finance and Procurement Officer to identify variations to assumptions and amend the
Medium Term Financial Plan accordingly.
• Pay Increases
The removal of the public sector pay cap of 1% on public sector pay will cause increasing
financial pressures for the fire authority. Although provision has been included within the
Medium Term Financial Plan for 2% pay awards for both operational and non-operational staff
for the next four years, this may be an underestimate. It is expected that Trade Unions will put
pressure on employers to increase pay in line with current levels of inflation which currently
exceed 2%.
Every additional 1% pay increase over that included within the Medium Term Financial Plan
would cost the Authority £0.6m per annum which would have to be funded by identifying further
efficiency savings.
• Policing and Crime Act 2017
The Police and Crime Act imposes a statutory requirement on emergency services to collaborate
to improve public safety and deliver better efficiency. The emergency services in West Yorkshire
have established a joint body to review areas of collaboration this is yet to deliver any significant
change. This process is dependant on the services agreeing joint priorities and delivering change
with willing partners. This must remain one of the key priorities if the Authority is to comply
with the Act.
• Summary
The Fire Authority continues to operate in a difficult environment and we accept that the above
issues present the Authority and its Management Board with a major challenge. However,
previous performance demonstrates the ability of the Authority and its management to manage
in challenging times. We are therefore confident that we have the ability to continue to deliver a
high quality service whilst driving through major changes to the organisation, and that the
systems are in place to further enhance our governance arrangements.
ANNUAL GOVERNANCE STATEMENT
Page 25 of 126 WYFRA
John Roberts
Chief Fire Officer / Chief Executive
27th July 2018
Alison Wood
Chief Finance and Procurement Officer
27th July 2018
Cllr Judith Hughes
Chair, West Yorkshire Fire & Rescue Authority
27th July 2018
STATEMENT OF RESPONSIBILITIES
Page 26 of 126 WYFRA
3. Statement of Responsibilities 1. The Authority’s Responsibilities
The Authority is required to:
Make arrangements for the proper administration of its financial affairs and to
secure that one of its officers has the responsibility for the administration of those
affairs. In this Authority it is the Chief Finance and Procurement Officer;
Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; and
Approve the Statement of Accounts.
2. The Chief Finance and Procurement Officer’s Responsibilities
The Chief Finance and Procurement Officer is responsible for the preparation of the Authority's Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASACC Code of Practice on Local Authority Accounting in the United Kingdom (The Code). In preparing this Statement of Accounts, the Chief Finance and Procurement Officer has:
Selected suitable accounting policies and then applied them consistently;
Made judgements and estimates that were reasonable and prudent; and
Complied with the Local Authority Code.
The Chief Finance and Procurement Officer has also:
kept proper accounting records which were up to date; and
taken reasonable steps for the provision and detection of fraud and other irregularities.
3. Certificates
I certify that the financial statements set out on pages 32-125 present a true and fair view
of the financial position of the West Yorkshire Fire and Rescue Authority as at 31 March
2018, and its income and expenditure for the year then ended.
STATEMENT OF RESPONSIBILITIES
Page 27 of 126 WYFRA
A Wood CPFA Chief Finance and Procurement Officer Dated: 27th July 2018 Authority Approval of Accounts Cllr R Grahame Chair of Audit Committee Dated: 27th July 2018
AUDIT OPINION
Page 28 of 126 WYFRA
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WEST YORKSHIRE FIRE AND RESCUE AUTHORITY
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of West Yorkshire Fire and Rescue Authority (‘the Authority’) for the year ended 31 March 2018 which comprise the Comprehensive Income and Expenditure Statement, the Balance Sheet, the Movement in Reserves Statement, the Cash Flow Statement and the related notes, including the accounting policies in note 1. In our opinion the financial statements:
give a true and fair view of the financial position of the Authority as at 31 March 2018 and of the Authority’s expenditure and income for the year then ended; and
have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2017/18.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Authority in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Going concern
We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the financial statements. We have nothing to report in these respects.
Other information published with the financial statements
The Chief Finance and Procurement Officer is responsible for the other information published with the financial statements, including the Narrative Statement and the Annual Governance Statement. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. In our opinion the other information published with the financial statements for the financial year is consistent with the financial statements.
AUDIT OPINION
Page 29 of 126 WYFRA
Chief Finance and Procurement Officer’s responsibilities
As explained more fully in the statement set out on page 26, the Chief Financial Officer is responsible for the preparation of the Authority’s financial statements in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2017/18. They are also responsible for: such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Authority’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting on the assumption that the functions of the Authority will continue in operational existence for the foreseeable future.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities
REPORT ON OTHER LEGAL AND REGULATORY MATTERS
Report on the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources
Conclusion
On the basis of our work, having regard to the guidance issued by the Comptroller and Auditor General in November 2017, we are satisfied that, in all significant respects, West Yorkshire Fire and Rescue Authority put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2018.
Respective responsibilities in respect of our review of arrangements for securing economy, efficiency and effectiveness in the use of resources
The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements. We are required under Section 20(1) (c) of the Local Audit and Accountability Act 2014 to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We report if significant matters have come to our
AUDIT OPINION
Page 30 of 126 WYFRA
attention which prevent us from concluding that the Authority has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. We have undertaken our review in accordance with the Code of Audit Practice, having regard to the guidance on the specified criterion issued by the Comptroller and Auditor General in November 2017, as to whether West Yorkshire Fire and Rescue Authority had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. The Comptroller and Auditor General determined this criterion as that necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether West Yorkshire Fire and Rescue Authority put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2018. Statutory reporting matters
The Code of Audit Practice requires us to report to you if:
any matters have been reported in the public interest under Section 24 of the Local Audit and Accountability Act 2014 in the course of, or at the conclusion of, the audit;
any recommendations have been made under Section 24 of the Local Audit and Accountability Act 2014;
an application has been made to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014;
an advisory notice has been issued under Section 29 of the Local Audit and Accountability Act 2014;
an application for judicial review has been made under Section 31 of the Local Audit and Accountability Act 2014.
We have nothing to report in these respects.
THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the members of the Authority, as a body, in accordance with Part 5 of the Local Audit and Accountability Act 2014. Our audit work has been undertaken so that we might state to the members of the Authority, as a body, those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the members of the Authority, as a body, for our audit work, for this report, or for the opinions we have formed.
AUDIT OPINION
Page 31 of 126 WYFRA
CERTIFICATE OF COMPLETION OF THE AUDIT
We certify that we have completed the audit of the financial statements of West Yorkshire Fire and Rescue Authority in accordance with the requirements of the Local Audit and Accountability Act 2014 and the Code of Audit Practice.
Robert Jones for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants Manchester 27th July 2018
Main Financial Statements
Page 32 of 126 WYFRA
Expenditure and Funding Analysis
This is a statement which was included in public sector accounts for the first time in
2016/17. The expenditure and funding analysis helps to explain the difference between the
way information is reported during the year in the form of budget monitoring reports to
directors and the statutory reporting format required for the final accounts which is shown
in the comprehensive income and expenditure statement. The bottom line on the
expenditure and funding analysis shows that the general fund and other earmarked reserves
at the end of 2017/18 total £35.74m (2016/17 £33.0m).
2016/17
Expenditure and Funding Analysis 2016/17
Net
Exp
end
itu
re
Ch
arge
able
to
th
e G
ener
al
Fun
d
Ad
just
me
nts
bet
wee
n
Fun
din
g an
d
Acc
ou
nti
ng
Bas
is (
No
te7)
Net
Exp
end
itu
re in
th
e C
om
pre
hen
sive
and
Inco
me
Ex
pen
dit
ure
St
ate
me
nt
(No
te 8
)
£'000 £'000 £'000
Service Delivery 20,355 17,837 38,192
Service Support 5,257 3,937 9,194
Employment Services 3,351 106 3,457
Legal and Governance 1,228 69 1,297
Finance and Procurement 599 66 665
Corporate Communications 118 16 134
Net Cost of Services 30,908 22,031 52,939
Other Income and Expenditure -34,985 -3,506 -38,491
(Surplus) or deficit -4,077 18,525 14,448
Opening General Fund Balance at 31 March 2016 28,957
Surplus on General Fund in year 4,077
Closing General Fund Balance (Including Earmarked reserves) at 31 March 2017 33,034
Main Financial Statements
Page 33 of 126 WYFRA
2017/18
Expenditure and Funding Analysis
2017/18 Net
Ex
pen
dit
ure
Ch
arge
able
to
th
e G
ener
al
Fun
d
Ad
just
me
nts
bet
wee
n
Fun
din
g an
d
Acc
ou
nti
ng
Bas
is (
No
te7)
Net
Exp
end
itu
re in
th
e C
om
pre
hen
sive
an
d In
com
e
Exp
end
itu
re
Stat
em
en
t (N
ote
8)
£'000 £'000 £'000
Service Delivery 18,987 17,205 36,192
Service Support 5,942 2,778 8,720
Employment Services 6,120 146 6,266
Legal and Governance 971 91 1,062
Finance and Procurement 1,652 87 1,739
Corporate Communications 179 30 209
Net Cost of Services 33,851 20,337 54,188
Other Income and Expenditure -37,012 -5,456 -42,468
Surplus or deficit -3,161 14,881 11,720
Restated General Fund Balance as at 31st March 2017 32,582
Surplus on General Fund in year 3,161
Closing General Fund Balance (Including Earmarked reserves) at 31 March 2018 35,743
Comprehensive Income and Expenditure Statement
From 2016/17 local authorities were no longer required to report based on the service expenditure analysis in the Service Reporting Code of Practice (SeRCOP) but to report on the same basis as the Authority's budget and performance monitoring reports. This format means that the service section of the comprehensive income and expenditure statement supports accountability and transparency as it reflects the way in which services operate and performance is managed.
However, this is perhaps the most misleading of the accounts because it does not show the
cost to the tax payer of providing the service as its title might suggest. What this statement
does show is the cost of providing services in the year in accordance with ‘generally
accepted accounting practices’ which require the inclusion of a number of large transactions
which do not involve the movement of cash. These include charges for depreciation and
Main Financial Statements
Page 34 of 126 WYFRA
variations in the estimated future cost of pensions. As a result of these adjustments it is not
possible to identify the cost of the service to the tax payer from this statement. Details of
the cost of the service and how this is funded through grant and council tax is shown in the
revenue outturn section of the report.
2017/18
2016/17 2017/18
Gro
ss
Exp
en
dit
ure
Gro
ss In
com
e
Ne
t
Exp
en
dit
ure
Gro
ss
Exp
en
dit
ure
Gro
ss In
com
e
Ne
t
Exp
en
dit
ure
£'000 £'000 £'000 £'000 £'000 £'000
40,625 -2,433 38,192 Service Delivery 38,647 -2,455 36,192 12,867 -3,673 9,194 Sevice Support 12,817 -4,097 8,720
3,557 -100 3,457 Employment Services 6,419 -153 6,266 1,308 -11 1,297 Legal and Governance 1,115 -53 1,062
687 -22 665 Finance and Procurement 1,788 -49 1,739 134 0 134 Corporate Communications 209 0 209
59,178 -6,239 52,939 Cost of Services 60,995 -6,807 54,188
3,002 -2,358 644 Other Operating Expenditure (Note 10) 2,838 -3,345 -507
42,186 -76 42,110 Financing and Investment Income & Expenditure
(Note 11) 38,364 -80 38,284
0 -81,245 -81,245 Taxation and Non specific Grant Income (Note 12) 0 -80,245 -80,245
104,366 -89,919 14,448 Deficit on Provision of Services 102,197 -90,477 11,720
-2,971 Unrealised Surplus or Deficit on revaluation of
fixed assets 0
222,373 Remeasurement of the net defined benefit
liability -1,163
Other adjustments
219,402 Other Comprehensive Income and Expenditure -1,163
233,850 Total Comprehensive Income and Expenditure 10,557
Main Financial Statements
Page 35 of 126 WYFRA
Movement in Reserves Statement
The Movement in Reserves Statement shows the movement in the year on the different
reserves held by the Authority, analysed into usable reserves (i.e. those that can be applied
to fund expenditure or reduce local taxation) and unusable reserves. The surplus or (deficit)
on the Provision of Services line shows the true economic cost of providing the Authority’s
services; more details of which are shown in the Comprehensive Income and Expenditure
Statement. These are different from the statutory amounts required to be charged to the
General Fund Balance for Council Tax setting.
2016/17
2017/18
Note Gen
eral
Fun
d
Bala
nce
Capi
tal R
ecei
pts
Rese
rve
Capi
tal G
rant
s
Una
pplie
d
Tota
l Usa
ble
Rese
rves
Unu
sabl
e
Rese
rves
TOTA
L
AU
THO
RITY
RESE
RVES
£'000 £'000 £'000 £'000 £'000 £'000
Restated Balance 01 April 2017 32,582 0 0 32,582 -1,351,016 -1,318,434
Total Comprehensive Income & Expenditure -11,720 -11,720 1,163 -10,557
Adjustments between accounting basis & funding basis
under regulations 9 14,881 14,881 -14,881 0
Increase/Decrease in 2017/18 3,161 0 0 3,161 -13,718 -10,557
Balance at 31 March 2018 carried forward 35,743 0 0 35,743 -1,364,734 -1,328,991
Movement in Reserves during 2017/18
An analysis of the reserves can be found in note 27, 28 and 29
Movement in Reserves during 2016/17
Note
Ge
ne
ral F
un
d
Bal
ance
Cap
ital
Re
ceip
ts
Re
serv
e
Cap
ital
Gra
nts
Un
app
lied
Tota
l Usa
ble
Re
serv
es
Un
usa
ble
Re
serv
es
TOTA
L
AU
THO
RIT
Y
RES
ERV
ES
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 01 April 2016 28,957 0 0 28,957 -1,113,089 -1,084,132
Total Comprehensive Income & Expenditure -14,448 -14,448 -219,402 -233,850
Adjustments between accounting basis & funding basis under regulations
9 18,525 18,525 -18,525 0
Increase/Decrease in 2016/17 4,077 0 0 4,077 -237,927 -233,850
Balance at 31 March 2017 carried forward 33,034 0 0 33,034 -1,351,016 -1,317,982
Main Financial Statements
Page 36 of 126 WYFRA
Balance Sheet
West Yorkshire Fire and Rescue Balance Sheet as at 31 March 2018
The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities
recognised by the Authority. The net assets of the Authority (assets less liabilities) are
matched by the reserves held by the Authority. Reserves are reported in two categories.
The first category of reserves are usable reserves; those reserves that the Authority may use
to provide services, subject to the need to maintain a prudent level of reserves and any
statutory limitations on their use (for example the Capital Receipts reserve that may only be
used to fund capital expenditure or repay debt).
The second category of reserves are unusable reserves; those reserves that the Authority is
not able to use to provide services. This category of reserves includes reserves that hold
unrealised gains and losses (for example the Revaluation Reserve), where amounts would
only become available to provide services if the assets are sold; and reserves that hold
timing differences shown in the Movement in Reserves Statement line "Adjustment
between accounting basis and funding basis under regulations".
The short term creditors’ and usable reserves’ opening balances, as at 31st March 2017,
have been adjusted to correct a prior period error. A historic creditor of £452k was classified
incorrectly following the transition to the International Financial Reporting Standards for the
preparation of the accounts. Although the error was not material, the balances were
corrected as use of the Authority’s reserves is a key factor in the strategic medium term
financial planning process.
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31 March 2017
Notes 31 March
2018
Restated
£'000 £'000
Property, Plant and Equipment 13
72,918 Other Land & Buildings 74,522
15,643 Vehicle, Plant & Equipment 16,367
4,224 Assets Under Construction 1,399
901 Intangible Assets 15 699
93,686 Long Term Assets 92,987
4,965 Short Term Investments 11,000
826 Assets Held for Sale 16 0
671 Inventories 19 785
15,754 Short Term Debtors 20 17,023
-2,853 Doubtful Debt provision 20 -3,154
4,820 Cash and Cash Equivalents 21 4,619
24,183 Current Assets 30,273
-392 Bank Overdraft 21 -470
-717 Short Term Borrowing -778
-8,854 Short Term Creditors 25 -10,292
-262 Provisions (<1yr) 26 -493
-10,225 Current Liabilities -12,033
-45,839 Long Term Borrowing -45,604
-22 Capital Grants received in Advance -22 -1,380,217 Net liability related to defined Benefit Pension Schemes 38 -1,394,592
-1,426,078 Long Term Liabilities -1,440,218
-1,318,434 Net Assets -1,328,991
32,582 Usable Reserves 27 35,743
-1,351,016 Unusable Reserves 29 -1,364,734
-1,318,434 Total Reserves -1,328,991
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Cash Flow Statement
The Cash Flow Statement shows the changes in cash and cash equivalents of the authority
during the reporting period. The statement shows how the authority generates and uses
cash and cash equivalents by classifying cash flows as operating, investing and financing
activities. The amount of net cash flows arising from operating activities is a key indicator of
the extent to which the operations of the Authority are funded by way of taxation and grant
income or from the recipients of services provided by the authority. Investing activities
represent the extent to which cash outflows have been made for resources which are
intended to contribute to the authority’s future service delivery. Cash flows arising from
financing activities are useful in predicting claims on future cash flows by providers of
capital (i.e. borrowing) to the authority.
The closing balance of cash of £4.149m can be seen on the Balance Sheet by deducting the
bank overdraft in current liabilities of £0.470m from the cash and cash equivalents in
current assets totalling £4.619m.
2017/18
2016/17
Notes 2017/18
£'000 £'000
-14,448 Net surplus or (deficit) on the provision of services -11,720
25,716 Adjustment to surplus or deficit on the provision of services for
noncash movements 22 24,861
-2,304 Adjust for items included in the net surplus or deficit 22 -3,359
on the provision of services that are investing and financing activities
8,964 Net Cash flows from operating activities 9,782
-11,040 Net Cash flows from Investing Activities 23 -8,574
-2,936 Net Cash flows from Financing Activities 24 -1,487
-5,012 Net increase or (decrease) in cash and cash equivalents -279
9,440 Cash and cash equivalents at the beginning of the reporting period 21 4,428
4,428 Cash and cash equivalents at the end of the reporting period 4,149
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Statement of Accounting Policies
General Principles
The Statement of Accounts summarises the Authority’s transactions for the 2017/2018 financial year and its position at the year end of 31 March 2018.
The Authority is required to prepare an annual Statement of the Financial Accounts as the Accounts and Audit Regulations 2015. These regulations require the Financial Accounts to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in 2017/18 and the Service Reporting Code of Practice 2017/18. Supported by International Financial Reporting Standards (IFRS).
The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.
The following accounting concepts have been applied and policies adopted in preparing the financial accounts:
Fundamental Accounting Concepts
The financial statements, other than cash flow information, are prepared on an accruals basis. This means that revenue and capital expenditure and income are recognised in the accounts in the period in which they are incurred or earned, not as money is paid or received.
Consistent accounting policies have been applied both within the year and between years unless otherwise identified.
The accounts have been prepared on a going concern basis that is on the assumption that the Authority will continue in operational existence for the foreseeable future.
The concept of materiality has been utilised such that insignificant items and fluctuations under an acceptable level of tolerance are permitted, provided in aggregate they would not affect the interpretation of the accounts.
Where specific legislative requirements and accounting principles conflict, legislative requirements are applied.
Accruals of Income and Expenditure
Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:
Revenue from the provision of services is recognised when the Authority can measure reliably the completion of the transaction and it is probable that economic benefits associated with the transaction will flow to the Authority.
Supplies are recorded as expenditure when they are consumed.
Expenses in relation to services received (including the services from employees) are recorded as expenditure when the services are received rather than when payments are made.
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Interest receivable on investments and payable on borrowing is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.
Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet.
(i) Cash and Cash Equivalents
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of more than 24 hours. The Authority has deposits in financial institutions that are repayable on demand which are classified in the accounts as cash and cash equivalents.
In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts which form an integral part of the Authority’s cash management.
(ii) Exceptional Items
Any exceptional items are included in the cost of service to which they relate or on the face of the Comprehensive Income and Expenditure Statement, if such a degree of prominence is necessary to give a fair presentation of the accounts. Details of such items are given in the notes to the accounts.
(iii) Prior Period Adjustments
Prior year adjustments may arise from changes in accounting policies or from the correction of a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment. Material errors that are identified in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.
(iv) Charges to Revenue for Non-Current Assets
Front line services and support services are debited with the following amounts to record the cost of holding fixed assets during the year:
o Depreciation attributable to the assets used by the relevant service.
o Revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the loss can be written off.
o Amortisation of intangible fixed assets attributable to the service.
The Authority is not required to raise council tax to fund depreciation, revaluation and impairment losses or amortisations; however, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement, which is calculated on a prudent basis determined by the Authority in accordance with statutory guidance.
Depreciation, revaluation and impairment losses and amortisations are replaced by a contribution in the General Fund Balance of Minimum Revenue Provision, by way of an
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adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.
(v) Employee Benefits
a. Benefits payable during employment
Short term benefits are those due to be settled within 12 months of the year end. They include such benefits as salaries, paid annual leave, paid sick leave, bonuses and non–monetary benefits (e.g. cars) for current employees and are recognised as an expense for services in the year which employees render service to the Authority.
An accrual is made for the cost of holiday entitlements, accrued flexi time and time in lieu earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to the deficit on the Provision of Services but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.
b. Termination Benefits
Termination benefits are amounts payable as a result of a decision by the Authority to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy.
Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by the Authority to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end.
Accounting for retirement benefits is carried out in line with International Accounting Standard 19 (IAS19). IAS19 requires an authority to see beyond its commitment to pay contributions to pension funds and to determine the full longer-term effect that the award of retirement benefits in any year has had on the authority’s financial position. Inclusion of the attributable share of the fund assets and liabilities does not mean that legal title or obligation has passed to the employer, instead it represents the employer’s commitment to increase contributions to make up any shortfall in attributable net assets, or its ability to benefit via reduced contributions from a surplus in the scheme.
IAS19 only applies to defined benefit schemes that are those where retirement benefits are determined independently of the investments of the scheme and employers have obligations to make contributions where assets are insufficient to meet employee benefits.
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c. Post-Employment Benefits
The Authority participates in the following retirement schemes:
o 1992 Firefighters’ Pension scheme (FPS).
o 2006 Firefighters’ Pension scheme (NFPS).
o Retained Modified scheme.
o 2015 Firefighters’ Pension scheme.
o Firefighters’ Compensation scheme (FCS).
o The Local Government Pension scheme (LGPS).
The Government introduced a new pension scheme on the 1st April 2015, the 2015
Firefighters Pension Scheme. Members of the 1992, 2006 and modified scheme either
transferred to the scheme with no protection, have tapered protection or have full
protection in the existing schemes as follows:
1992 Firefighters’ Pension scheme
If a member at the 1/4/12 was within 10 years of the normal pension age, and were aged
45 and over then full protection is awarded and the member remains in the 1992 FPS.
If a member at the 1/4/12 was aged between 41 and 45 they have tapered protection and
will join the 2015 scheme as at specified date unique to the member.
2006 Firefighters’ Pension scheme
If a member at the 1/4/12 was within 10 years of the normal pension age, and were aged
50 and over then full protection is awarded and the member remains in the 1992 FPS.
If a member at the 1/4/12 was aged between 46 and 50 they have tapered protection and
will join the 2015 scheme at a specified date unique to the member.
Retained Modified Scheme
Members have the same protection as those in the 1992 FPS because they have a normal
retirement age of 55.
The Authority maintains a Firefighters’ Pensions Fund from which pension payments are made and into which all contributions (employees and employer’s) are received. The annual deficit is topped up as necessary by specific government grant.
Under the Firefighters’ Compensation Scheme injury awards are payable to those firefighters who have sustained a qualifying injury in the exercise of their duties as a firefighter which are paid from the Authority’s revenue account.
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The Local Government Pension scheme (LGPS) is accounted for as a defined benefit scheme
o The liabilities of the LGPS attributable to the Authority are included in the Balance Sheet on an actuarial basis using an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees based on assumptions about mortality rates, employee turnover rates and projections of expected earnings for current employees.
o Liabilities are discounted to their value at current prices using a discount rate of 2.6%.
o The assets of the LGPS attributable to the Authority are included in the Balance Sheet at their fair value.
The change in the net pension’s liability is analysed into seven components:
- Current service cost – the increase in liabilities as a result of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the service to which the employee worked.
- Past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement.
- Net interest on the net defined benefit liability (asset), i.e. net interest expense for the Authority – the change during the period in the net defined liability (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement. This is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined liability (asset) at the beginning of the period taking into account any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payments.
Re-measurements comprising:
- The return on plan assets – excluding amounts included in net interest on the net defined liability (asset) which is charged to the Pensions Reserve as Other Comprehensive Income and Expenditure.
- Gains or losses on settlements and curtailments – the result of actions to relieve the Authority of liabilities or events that reduce the expected future service or accrual of benefits to employees – debited or credited to the deficit on the Provision of Service in the Comprehensive Income and Expenditure Statement as part of non-distributed costs.
- Actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – charged to the Pensions Reserve as Other Comprehensive Income and Expenditure.
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- Contributions paid to the LGPS – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense.
In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by the Authority to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end. The negative balance that arises on the Pension Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirements benefits on the basis of cash flows rather than as benefits earned by employees.
The 2017/18 Code (and IAS 19 Employee Benefits Revised) requires that administration costs directly related to the management of plan assets and any tax payable by the plan itself, other than tax included in the actuarial assumptions used to measure the defined benefit obligations, are recognised as a reduction in the return on plan assets and recorded in Other Comprehensive Income and Expenditure.
The 2017/18 Code does not prescribe a specific accounting treatment for administration costs that are not deducted from the return on plan assets. The accounting treatment adopted by West Yorkshire Pension Fund is to deduct administration costs from the cost of services.
d. Discretionary Benefits
The Authority also has the restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension scheme.
(vi) Events After the Balance Sheet Date
Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified:
o Those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events.
o Those that are indicative of conditions that arose after the reporting period – the Statement of Accounts are not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect.
(vii) Financial Instruments Financial Liabilities Financial Liabilities are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value
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and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised.
For most of the borrowings that the Authority has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in the loan agreement.
Gains and losses on the repurchase or early settlement of borrowing are credited and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repurchase/settlement. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate.
Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Authority has a policy of spreading losses over the life of the replacement loan and gains over a similar period up to a maximum of ten years. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.
Financial Assets
Financial assets are classified into two types:
o Loans and receivables – assets that have fixed or determinable payments but are not quoted in an active market.
o Available for sale assets – assets that have a quoted market price and/or do not have fixed or determinable payments.
Loans and Receivables
Loans and receivables are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement (CIES) for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument.
For most of the loans that the Authority has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement.
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Where assets are identified as impaired because of a likelihood arising from a past event that payments due under the contract will not be made, the asset is written down and a charge made to the Financing and Investment line in the Comprehensive Income and Expenditure Statement.
Any gains/losses that arise on the de-recognition of the asset are credited/debited to the Financing and Investment line in the Comprehensive Income and Expenditure Statement.
Available for Sale Assets
Available-for-sale assets are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured and carried at fair value. Where the asset has fixed or determinable payments, annual credits to the Financing and Investment Income and Expenditure line in the CIES for interest receivable are based on the amortised cost of the asset multiplied by the effective interest rate for the instrument. Where there are no fixed or determinable payments, income (for example, dividends) is credited to the CIES when it becomes receivable by the Authority.
Foreign Currency Translation
Where the Authority has entered into a transaction denominated in a foreign currency, the transaction is converted into sterling at the exchange rate applicable on the date the transaction was effective.
(x) Government Grants and Contributions
Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Authority when there is reasonable assurance that:
o The Authority will comply with the conditions attached to the payments; and
o The grants or contributions will be received.
Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contributions have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed by the recipient as specified, if not, future economic benefits or service potential must be returned to the transferor.
Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-Specific Grant Income (non-ring fenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement.The Authority has set a de Minimis level for revenue grants and contributions at £20,000.
Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has been used to finance capital expenditure, it is posted to the Capital Grants Unapplied Reserve. Where it is applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.
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(xi) Intangible Assets
Expenditure on the acquisition of intangible assets is capitalised, brought onto the balance sheet at cost and amortised over the period benefit is received. Estimated lives for new intangible assets vary.
Intangible assets are amortised on their current net book value and it is assumed that residual value is insignificant or nil. Intangible assets are reviewed annually for impairment. All services are charged with a provision for amortisation and, where required, any related impairment loss, for all intangible assets used in the provision of the service.
(xii) Inventories and Long Term Contracts
Inventories are included in the Balance Sheet at the lower of cost and net realisable value.
(xiii) Leases
Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. Leases that do not meet the definition of finance leases are accounted for as operating leases. The Authority had no finance leases in 2017/18.
Operating Leases
Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the service benefitting from the use of the leased property, plant or equipment.
Charges are made on a straight line basis over the life of the lease, even if this does match the pattern of payments.
The Authority leases no assets to other organisations.
(xiv) Overheads and Support Services
The cost of overheads and support services are charged to service segments in accordance with the Authority’s arrangements for accountability and performance.
(xv) Property, Plant and Equipment
Assets that have physical substance and are held for use in the supply of services or for administering services and are expected to be used during more than one financial year are classified as Property, Plant and Equipment.
Recognition
Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Authority and the cost of the item can be measured reliably.
The cost of enhancement work to existing assets is added to the appropriate fixed asset balance where the enhancement increases either the value or life of the asset. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits is charged as an expense when it is incurred.
The Authority has a diminimis level of £10,000 whereby new capital schemes below this limit are charged to revenue expenditure.
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Measurement
Assets are initially measured at cost comprising the purchase price and any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Assets are carried in the Balance Sheet using the following measurement bases:
o Assets under construction – historical cost.
o Operational Assets – including all fire stations, the Urban Search and Rescue Building and buildings at FSHQ - depreciated replacement cost
o Surplus land at Fire Service Head Quarters - market value.
o Non-property assets with short useful lives and/or low values – depreciated historical cost.
o Assets held for sale – market value
o Fire Appliances – due to their specialist nature these are valued at depreciated historical cost.
o All other assets – fair value, determined as the amount that would be paid for the asset in its existing use.
Property assets are formally valued every five years, with the last full valuation being as at 31 March 2015. Valuations are also carried out when there is a major natural disaster and/or there are major refurbishments.
In the years where no full valuation is completed, the property manager undertakes a desktop valuation to determine if the authority should make any adjustments to the property valuations.
Increases in valuations are matched by credits to the revaluation reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Comprehensive Income and Expenditure Statement where they arise from the reversal of a loss previously charged to a service.
Where decreases in value are identified, they are accounted for by:
o Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gain).
o Where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.
The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated in the Capital Adjustment Account.
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Impairment
Assets are assessed at the end of each financial year as to whether there is any indication that an asset may be impaired.
Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall.
Where identified, the impairment losses are accounted for by:
o Where there is a balance of revaluation gains for the asset in the revaluation reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains).
o Where there is no balance in the revaluation reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.
Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised.
Depreciation
Depreciation is provided for on all fixed assets with a determinable finite life except for freehold land and assets under construction. Assets are depreciated on the straight line basis. Land & Buildings and motor vehicles are depreciated from date operational. All other assets are depreciated from 1st October in year of acquisition. Estimated lives for new assets vary but are mainly as follows:
o Buildings 21-50 years
o Vehicles and operational equipment 5-12 years
o Fixtures and fittings 10 years
o Computer equipment 5 years
Estimated lives for all new appliances will be 12 years.
Where an item of Property, Plant and Equipment has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately.
Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account.
Componentisation
For those assets where the cost of the component parts is significant, they are depreciated separately from the rest of the asset. The Authority has a £500,000 de Minimis level on the net book value which means that if the carrying value of the asset is lower than this de Minimis the asset is not componentised. For those assets that are assessed for
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componentisation each component must represent 25% of the total cost of the asset or the depreciation charges must be significant to the charge if componentisation was not used. The componentisation of an asset is also reviewed if the asset has significant enhancement expenditure during the year, is purchased/built from new and also during the formal 5 yearly property valuations. The Authority does not componentise fire appliances because the component parts have the same useful life as the asset as a whole.
Disposals and Non-Current Assets Held for Sale
Once management has made the decision that an asset has become surplus to requirements and it is being actively marketed for sale it is reclassified as an Asset Held for Sale. The asset is re-valued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell.
Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previous losses recognised in the surplus or deficit on the Provision of Services. Depreciation is not charged on Assets Held for Sale.
If assets no longer meet the criteria to be classified as Assets Held for Sale, they are reclassified back to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale, adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as held for sale, and their recoverable amount at the date of the decision not to sell.
When an asset is disposed of, the carrying amount of the asset in the Balance Sheet is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.
Amounts received for a disposal in excess of £10,000 are categorised as capital receipts.
The written off value of disposals is not a charge against council tax, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.
(xvi) Unusual or material charges or credits in the Accounts
These are items that due to their nature and/or value require separate disclosure. Details of unusual or material charges or credits in the Accounts for 2017/18 are shown in Note 5.
(xvii) Provisions, Contingent Liabilities and Contingent Assets
Provisions
Provisions are made where an event has taken place that gives the Authority a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year the Authority becomes aware of the
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obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
Contingent Liabilities
A contingent liability arises where an event has taken place that gives the Authority a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Authority.
Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Contingent Assets
A contingent asset arises where an event has taken place that gives the Authority a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Authority.
Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts.
(xviii) Reserves
These are amounts set aside for purposes falling outside the definition of provisions. The Authority’s Revenue Reserves some of which can be used to support expenditure and others which have been established for other purposes. The General Fund Balance can be used to meet both capital and revenue expenditure and a minimum level must be maintained for risk management purposes. The Authority also has a number of earmarked reserves which are held for identified specific expenditure in the future. These will be reviewed periodically and those no longer required will be transferred to the General Fund Balance.
The balances on the following reserves: capital adjustment account, the financial instruments adjustment account, the revaluation reserve, the pension reserve, and the collection fund adjustment account cannot be used for future expenditure.
(xix) Revenue Expenditure Funded from Capital under Statute
This represents expenditure which may properly be capitalised under statutory provisions but which does not represent fixed assets. The expenditure is written off to revenue in the year it is incurred and an adjustment is made on the statement of General Fund Balance for the same amount so that there is no impact on council tax.
(xx) Value Added Tax
VAT is included in the accounts only to the extent that it is irrecoverable and therefore charged to service expenditure as appropriate.
VAT receivable is excluded from income.
Main Financial Statements
Page 52 of 126 WYFRA
(xxi) Council Tax and Business Rates Income
Billing Authorities in England are currently required by statute to maintain a separate fund
for the collection and distribution of amounts due in respect of council tax and the business
rates retention scheme. In its capacity as a billing authority, an authority acts as an agent - it
collects and distributes council tax and business rates income on behalf of itself and other
major preceptors such as the Fire Authority.
Council tax and business rates income collected by billing authorities is credited to their
collection fund and represents accrued income for the year. Regulations determine when
this income should be released from the collection fund and transferred to the general fund
of the billing authority and other major preceptors (which in turn is credited to their general
funds). The amount credited under these regulations is the authority's precept and income
from the business rates retention scheme for the year, plus the authority's share of the
surplus or deficit on the collection fund for the previous year.
The income which must be included in the Comprehensive Income and Expenditure
statement is the accrued income for the year and not the actual income received in the year.
Any difference between these figures is charged to the Collection Fund Adjustment account
which is held on the Balance Sheet and is included in the Movement of Reserves Statement.
This ensures that the difference between the accrued income and the actual income received
does not impact on the general fund.
Since the collecting Authority is collecting income on behalf of the Fire Authority, then the
Fire Authority must also share in any surplus or deficit or collection.
The Authority therefore makes provision for the following items in its balance sheet at the
financial year end:
o Debtors for the Authority's share of council tax and business rates retention arrears at 31 March 2018.
o Provision for bad debts of Debtors in relation to council tax and business rates retention arrears as at 31 March 2018.
o Income in advance from council tax and business rate payers who have paid their bills early.
o Creditor provision where the billing authorities have over-collected council tax and business rates income in year compared to the value of amounts actually paid over to the Authority.
o Creditor provision for appeals by business rate payers who disagree with the Valuation of their premises for business rates purposes.
Main Financial Statements
Page 53 of 126 WYFRA
2. Accounting Standards that have been issued but have not yet been applied The Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 (the Code) requires that the Authority discloses information relating to the impact of an accounting change that will be required by a new standard that has been issued but not yet adopted.
The additional disclosures that will be required in the 2017/18 and 2018/19 financial statements in respect of accounting changes that are introduced in the 2017/18 code are:-
1) IFRS 9 Financial Instruments ‘The Authority will adopt IFRS9 Financial Instruments effective from 1st April 2018.
The main changes include the reclassification of financial assets and the impairment
of financial assets. Impairment may include expected lifetime credit losses if there is
a significant increase in risk or a possible default event over the assets life.
The Authority does not expect the reclassification changes to have a material impact
upon the financial statements because the majority of its financial assets will retain
the same measurement basis. From the 1st April 2018 the authority irrevocably
elects to present changes in the fair value of equity investments in other
comprehensive income as permitted by the IFRS.
The Authority does not expect the impairment changes to have a material impact
upon the financial statements because the impairment charge will be immaterial for
its treasury management assets such as bank deposit accounts and amounts held
within the Debt Management Office (DMO).
2) Amendments in IAS 7 Statement of Cash Flows – Disclosure initiative.
These amendments come with the objective that entities shall provide disclosures
that enable users of financial statements to evaluate changes in liabilities arising
from financing activities, including both changes arising from cash flows and non-
cash changes. To fulfil this disclosure requirement, reconciliation between the
opening and closing balances in the Balance sheet for liabilities arising from financing
activities will be provided within the notes to the financial statements.
3) IFRS 15 Revenue from contracts with customers.
The Authority will adopt IFRS 15 Revenue from contracts with Customers effective
from 1st April 2018. The standard has far more prescriptive requirements than the
previous standard it replaces, as the Authority is required to recognise revenue in a
manner that depicts the pattern of transfer of goods and services to customers. IFRS
15 applies to all contracts with customers excluding leases, Insurance contracts and
financial instruments; Revenue from Council Tax & Non Domestic Rates is also
outside the scope of the standard.
Main Financial Statements
Page 54 of 126 WYFRA
The Authority does not expect the changes to have a material impact upon the
financial statements as the Authority recognises revenue at the point when the
control of the goods or services passes to the customer.
4) Amendments to IAS 12 Income Taxes – Recognition of Deferred Tax Assets for
unrealised losses.
A deferred tax asset is recognised for an unused loss carry forward or unused tax
credit if it is probable the loss or credit carried forward can be offset against the
future taxable profit. The carrying amount of the deferred tax asset is reviewed at
the end of the reporting period and reduced according to whether it is probable that
there will be sufficient taxable profit to allow the benefit of part or all of the
deferred tax asset to be utilised. This will have no material impact upon the
Authority.
3. Critical Judgements in Applying Accounting Policies
In applying the accounting policies set out in Note 1, The Authority has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are:
Judgements made in the process of applying the Authority's accounting policies that have the most significant effect on the amounts recognised in the financial statements, eg:
a) Influences on going concern, such as future levels of funding for fire services. However, the Authority has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Authority might be impaired as a result of a need to close facilities and reduce levels of service provision.
b) The Authority has an outstanding uninsured claim relating to exposure to asbestos, and it is possible that further claims may arise in the future.
Main Financial Statements
Page 55 of 126 WYFRA
4. Assumptions made about the future and other major sources of estimation uncertainty
The Statement of Accounts contains estimated figures that are based on assumptions made
by the Authority about the future or that are otherwise uncertain. Estimates are made taking
into account historical experience, current trends and other relevant factors. However,
because balances cannot be determined with certainty, actual results could be materially
different from the assumptions and estimates.
The items in the Authority's Balance Sheet at 31 March 2018 for which there is a significant
risk of material adjustment in the forthcoming financial year are as follows:
Item Uncertainties Effect If actual results differs from
Assumptions
Property, Plant
and equipment
Provisions
Pensions
Liability
Arrears
to be reduced.
As at the 31st March 2018 the provision for the
Assets are depreciated over useful lives that are
dependent on assumptions about the level of
repairs and maintenance on individual assets.
The current economic climate makes it
uncertain if the Authority can sustain the
amount of the asset falls. It is estimated that the
annual charge for depreciation would increase by
£496k for every year that the useful lives have
current level of expenditure on repairs and
maintenance which could bring into doubt
useful lives assigned to the assets.
The Authority shares the collection fund surplus
in retirement and mortality ages and expected
returns on investment funds. A firm of actuaries
and deficits with the 5 district councils of West
Yorkshire. Due the current economic climate the
estimated collection fund balance may be more
volatile.
of sundry debtors for £220k. Due to the low levels of
bad debt the Authority does not have the need for a
bad debt provision but due to the current economic
climate this policy may be reviewed.
If the useful lives of assets are reduced,
depreciation increases and hence the carrying
are appointed to provide the Authority with
expert advice.
At the 31 March 2018 the Authority had a balance
The estimation of the net liability to pay pensions
depends on a number of complex judgements
relating to the discount rate used, the rate at
which salaries are projected to increase, changes
ways and changes to other estimates and actuarial
non payment of council tax debtors
is £3,154k (£2,853k 2016/17).
This may rise due to the economic climate
because council tax payers maybe unable to pay
council tax.
The effects on the net pension liability of changes
in individual assumptions can be measured. For
instance a 0.5% increase in the discount rate
assumption would result in a decrease in the
pension liability of £6.85 million.
However, the assumptions interact in complex
reserves.
assumptions may produce a different impact on
the total liability.
The amount of debt exceeding 3 months was £78k
as at the 31 March 2018. This is to be monitored
and a provision would have to be funded from
revenue reducing the level of general fund
Main Financial Statements
Page 56 of 126 WYFRA
5. Material Items of Income and Expense
It is a requirement of the Code of Practice that details of any material items of income and
expenditure that are not disclosed on the face of the Comprehensive Income and
Expenditure Statement (CIES) are identified.
IAS19 Employee Benefits
This standard requires the recognition of the cost of pensions to be recorded in the CIES.
Due to the volatility and uncertainty of the estimation process involved in the calculation of
these costs there are significant variations each year. In 2017/18 a credit of £20.7m has
been recorded in the cost of services in the CIES (£25m 2016/17).
This charge has no impact upon the balances of the Fire Authority or upon Council Tax.
6. Events after the Balance Sheet Date
The Statement of Accounts was authorised for use by the Chief Finance and Procurement
Officer on the 31st May 2018. Events taking place after this date are not reflected in the
financial statements or notes. Where events taking place before this date provided
information about conditions existing at the 31 March 2018, the figures in the financial
statements and notes have been adjusted in all material aspects to reflect the impact of this
information.
Main Financial Statements
Page 57 of 126 WYFRA
7. Note to the Expenditure and Funding Analysis
This note provides a reconciliation of the main adjustments to Net Expenditure chargeable
to the General Fund to arrive at the amounts in the Comprehensive Income and Expenditure
Statement. The relevant transfers between reserves are explained in the Movement in
Reserves Statement.
2016/17
Adjustments from General Fund
to arrrive at Comprehensive
Income & Expenditure Statement
amounts A
dju
stm
en
t fo
r C
apit
al
Pu
rpo
ses
(1)
Net
Ch
ange
fo
r
the
Pe
nsi
on
s
Ad
just
me
nts
(2)
Oth
er
Dif
fere
nce
s (3
)
Tota
l A
dju
stm
en
ts
£'000 £'000 £'000 £'000
Service Delivery 3,542 14,295 17,837
Sevice Support 3,443 494 3,937
Employment Services 106 106
Legal and Governance 69 69
Finance and Procurement 66 66
Corporate Communications 16 16
Net Cost of Services 6,985 15,046 0 22,031
Other Operating expenditure - a 391 531 922
Finance and Investment income and expenditure - b
-4,427 -4,427
Taxation and non specific grant income and expenditure - c
-1 -1
Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement surplus or deficit
2,948 15,046 531 18,525
Main Financial Statements
Page 58 of 126 WYFRA
2017/18
Adjustments from General Fund to arrrive at Comprehensive Income & Expenditure Statement amounts A
dju
stm
en
t
for
Cap
ital
P
urp
ose
s (1
)
Net
Ch
ange
fo
r th
e P
en
sio
ns
Ad
just
me
nts
(2
)
Oth
er
Dif
fere
nce
s
(3)
Tota
l A
dju
stm
en
ts
£'000 £'000 £'000 £'000
Service Delivery 2,622 14,583 17,205
Sevice Support 2,166 612 2,778
Employment Services 8 138 146
Legal and Governance 91 91
Finance and Procurement 3 84 87
Corprate Communications 30 30
Net Cost of Services 4,799 15,538 0 20,337
Other Operating expenditure - a -522 -16 -538
Finance and Investment income and expenditure - b
-4,127 -4,127
Taxation and non specific grant income and expenditure - c
-791 -791
Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement surplus or deficit
-641 15,538 -16 14,881
1. Adjustments for Capital Funding and Expenditure Purposes
This column adds in depreciation and impairment and revaluation gains and losses in the
services line for
(a) Other operating expenditure – adjusts for capital disposals with a transfer of income on disposal of assets and the amounts written off for those assets
(b) Financing and Investment income and expenditure – the statutory charges for capital financing and other revenue contributions are deducted as these are not chargeable under generally accepted accounting practices
Main Financial Statements
Page 59 of 126 WYFRA
(c) Adjustments are made for capital and revenue grants whose conditions have or have not been made during the year.
2. Net change for the removal of pension contributions and the addition of pension (IAS19) related
expenditure and income
(a) For services this represents the removal of the employer pension contributions made by the Authority as permitted by statute and replacement with current service costs and past service costs
(b) Financing and Investment income and expenditure – the net interest on the defined benefit liability is charged to the CIES
3. Other Differences
Other differences between amounts debited/credited to the Comprehensive Income and
Expenditure Statement and amounts payable/receivable to be recognised under statute.
8. Expenditure and Income Analysed by Nature
Expenditure/Income 2016/17 2017/18
£'000 £'000
Expenditure:
Employees 37,912 40,800
Other service expenses 11,981 10,549
Support Services 3,488 3,630
Capital Charges 5,797 6,016
Disposal of Fixed Assets 3,002 2,838
Interest payments 42,186 38,364
Total Expenditure 104,366 102,197
Income:
Government grants and contributions -1,549 -2,058
Other Non Government Grants -424 -382
Customer and Client Receipts -1,015 -936
Internal Income -3,251 -3,431
Fixed Assets Sales Proceeds -2,358 -3,345
Interest Receivable and similar income -76 -80
Taxation and Non Specific Grant Income -81,245 -80,245
Total Income -89,918 -90,477
Surplus or deficit on the Provision of Services 14,448 11,720
Main Financial Statements
Page 60 of 126 WYFRA
9. Adjustments between Funding and Accounting Basis This note details the adjustments that are made to the total Comprehensive Income and Expenditure Statement recognised by the Authority in the year in accordance with proper accounting practice to arrive at the resources specified by statutory provisions as being available to the authority to meet future capital and revenue expenditure. The following sets out a description of the reserves that the adjustments are made against:- General Fund Balance The General Fund is the statutory fund into which all the receipts of the authority are required to be paid and out of which all liabilities of the authority only are to be met except to the extent that statutory rules might provide otherwise. These rules can be specifying the financial year in which the liabilities and payments should impact on the General Fund balance, which is not necessary in accordance with proper practice. The General Fund balance therefore summarises the resources that the Authority is statutorily empowered to spend on its services or on capital investment (or the deficit of resources that the Authority is required to recover) at the end of the financial year. Capital Receipts Reserve The Capital Receipts Reserve holds the proceeds from the disposal of land or other assets, which are restricted by statute from being used other than to fund new capital expenditure or to be set aside to finance historical capital expenditure. Capital Grants Unapplied The Capital Grants Unapplied (reserve) holds the grants and contributions received towards capital projects for which the authority has met the conditions that would otherwise require repayment of the monies but which have yet to be applied to meet expenditure. The balance is restricted by the grant terms as to the capital expenditure against which it can be applied and/or the financial year in which this can take place. The relevant transfers between reserves are explained in the Movement in Reserves statement.
Main Financial Statements
Page 61 of 126 WYFRA
.
Ge
ne
ral F
un
d
Bal
ance
Cap
ital
Re
ceip
ts
Re
serv
e
Cap
ital
Re
ceip
ts
Un
app
lie
d
TOTA
L U
sab
le
Re
serv
es
Mo
vem
en
t in
Un
usa
ble
Re
serv
es
£'000 £'000 £'000 £'000 £'000
Adjustments involving the Capital Adjustment Account
Reversal of items debited or credited to the CIES
Charges for depreciation and impairment of
non current assets
7,401 7,401 -7,401
Revaluation losses on property, plant and
equipment
-633 -633 633
Amortisation of intangible assets 217 217 -217
Capital grants and contributions -1 -1 1
Revenue expenditure funded from capital
under statue
684 684 -684
Amounts of non current assets written off on
disposal or sale as part of the gain/loss on
disposal to the CIES
2,695 2,695 -2,695
Insertion of items not debited or credited to the CIES
Statutory provision for the financing of capital
investment
-4,427 -4,427 4,427
5,936 5,936 -5,936
Adjustments involving the Capital Receipts Reserves
Transfer of sale proceeds credited as part of the
gain/loss on disposal to the CIES
-2,304 -2,304 2,304
-2,304 -2,304 2,304
Adjustments involving the Financial
Instruments Adjustment Account
Amount by which finance costs charged to the
CIES are different from finance costs
chargeable in the year in accordance with
statutory requirements
-62 -62 62
-62 -62 62
Adjustments involving the Pensions Reserve
Reversal of items relating to retirement
benefits debited or credited to the CIES
59,221 59,221 -59,221
Employe'rs pension contributions and direct
payments to pensioners payable in the year
-44,175 -44,175 44,175
15,046 15,046 -15,046
Adjustments involving the Collection Fund
Adjustment Account
Amount by which council tax income credited
to the CIES is different from council tax income
calculated for the year in accordance with
statutory requirements
-300 -300 300
-300 -300 300
Adjustment involving the Accumulating
Compensated Absences Adjustment Account
Amount by which officer remuneration charged
to the CIES on an accruals basis is different from
remuneration chargeable in the year in
accordance with statutory requirements.
209 209 -209
209 209 -209
Total Adjustments 2016/17 18,525 18,525 -18,525
2016/17
Main Financial Statements
Page 62 of 126 WYFRA
Gen
eral
Fun
d
Bala
nce
Capi
tal R
ecei
pts
Rese
rve
Capi
tal R
ecei
pts
Una
pplie
d
TOTA
L U
sabl
e
Rese
rves
Mov
emen
t in
Unu
sabl
e
Rese
rves
£'000 £'000 £'000 £'000 £'000
Adjustments involving the Capital Adjustment Account
Reversal of items debited or credited to the CIES
Charges for depreciation and impairment of
non current assets
4,581 4,581 -4,581
Revaluation losses on property, plant and
equipment
0 0 0
Amortisation of intangible assets 218 218 -218
Capital grants and contributions -791 -791 791
Revenue expenditure funded from capital
under statue
462 462 -462
Amounts of non current assets written off on
disposal or sale as part of the gain/loss on
disposal to the CIES
2,837 2,837 -2,837
Insertion of items not debited or credited to the CIES
Statutory provision for the financing of capital
investment
-4,127 -4,127 4,127
3,180 3,180 -3,180
Adjustments involving the Capital Receipts Reserves
Transfer of sale proceeds credited as part of the
gain/loss on disposal to the CIES
-3,359 -3,359 3,359
-3,359 -3,359 3,359
Adjustments involving the Financial
Instruments Adjustment Account
Amount by which finance costs charged to the
CIES are different from finance costs
chargeable in the year in accordance with
statutory requirements
-62 -62 62
-62 -62 62
Adjustments involving the Pensions Reserve
Reversal of items relating to retirement
benefits debited or credited to the CIES
61,122 61,122 -61,122
Employe'rs pension contributions and direct
payments to pensioners payable in the year
-45,584 -45,584 45,584
15,538 15,538 -15,538
Adjustments involving the Collection Fund
Adjustment Account
Amount by which council tax income credited
to the CIES is different from council tax income
calculated for the year in accordance with
statutory requirements
-445 -445 445
-445 -445 445
Adjustment involving the Accumulating
Compensated Absences Adjustment Account
Amount by which officer remuneration charged
to the CIES on an accruals basis is different from
remuneration chargeable in the year in
accordance with statutory requirements.
29 29 -29
29 29 -29
Total Adjustments 2017/18 14,881 14,881 -14,881
2017/18
Main Financial Statements
Page 63 of 126 WYFRA
10. Other Operating Expenditure
11. Financing and Investment Income and Expenditure
Interest receivable and similar income represents the amount of interest earned on the
Authority’s revenue balances in 2017/18.
12. Taxation and Non Specific Grant Income
(1) This note consolidates all non-specific grants and contributions receivable that cannot be
identified to any particular service expenditure.
2016/17 2017/18
£'000 £'000
3,002 Net Book value of non current assets 2,838
2,358 Sale Procceds 3,345
644 (Gains)losses on the disposal of non current assets -507
2016/17 2017/18
£'000 £'000
2,044 Interest Payable and similar charges 2,040
40,080 Pensions interest cost 36,262
0 Expected Return on pension assets 0
-76 Interest Receivable and similar income -80
62 Income and expenditure in relation to
investment properties and changes in fair value62
42,110 TOTAL 38,284
2016/17 2017/18
£'000 £'000
-37,669 Council Tax Income -39,219
-7,455 Non Domestic rates -6,846
-35,813 Non ring fenced Government Grants -33,313
-308 Capital Grants and Contributions (1) -867
-81,245 TOTAL -80,245
Main Financial Statements
Page 64 of 126 WYFRA
13. Property, Plant and Equipment
Movements 2016/17
Lan
d &
Bu
ildin
gs
Veh
icle
s, P
lan
t &
Eq
uip
me
nt
Ass
ets
un
der
C
on
stru
ctio
n
Surp
lus
asse
ts
Tota
l
£'000 £'000 £'000 £'000 £'000
Cost or Valuation
1 April 2016 70,582 34,350 5,223 785 110,940
Additions 1,655 1,684 4,674 0 8,013
Acc Depreciation written off to Cost -568 0 0 0 -568
Revaluation recognised in the Revaluation Reserve 2,971 0 0 0 2,971
Revaluation recognised in the Surplus/Deficit -2,345 0 0 0 -2,345
De-recognition - Disposals -931 -2,043 0 -635 -3,609
Derecognition - Other 0 0 0 0 0
Assets reclassified (to)/from Held for Sale -410 -114 0 -150 -674
Assets reclassified (to)/from Assets Under Construction 4,926 1,443 -6,369 0 0
Other movements in Cost or Valuation 0 -696 696 0 0
31 March 2017 75,880 34,624 4,224 0 114,728
Depreciation & Impairment
1 April 2016 1,907 18,348 8 245 20,508
Depreciation charge 1,634 2,760 0 0 4,394
Acc Depreciation written off to Cost -449 0 0 0 -449
Acc. Impairment written off to Cost -119 0 0 0 -119
Derecognition - Disposals -15 -2,013 0 -215 -2,243
Assets reclassified (to)/from Held for Sale 4 -114 -8 -30 -148
31 March 2017 2,962 18,981 0 0 21,943
Net Book Value
31 March 2017 72,918 15,643 4,224 0 92,785
31 March 2016 68,675 16,002 5,215 540 90,432
Main Financial Statements
Page 65 of 126 WYFRA
Movements 2017/18
Lan
d &
Bu
ildin
gs
Veh
icle
s, P
lan
t &
Eq
uip
me
nt
Ass
ets
un
der
C
on
stru
ctio
n
Surp
lus
asse
ts
Tota
l
£'000 £'000 £'000 £'000 £'000
Cost or Valuation
1 April 2017 75,880 34,624 4,224 0 114,728
Additions 1,526 1,582 2,993 0 6,101
Acc Depreciation written off to Cost 0 0 0 0 0
Revaluation recognised in the Revaluation Reserve 0 0 0 0 0
Revaluation recognised in the Surplus/Deficit 0 0 0 0 0
De-recognition - Disposals -2,006 -1,913 0 0 -3,919
Derecognition - Other 0 0 0 0 0
Assets reclassified (to)/from Held for Sale 0 0 0 0 0
Assets reclassified (to)/from Assets Under Construction 3,775 2,043 -5,818 0
Other movements in Cost or Valuation 0 0 0 0 0
31 March 2018 79,175 36,336 1,399 0 116,910
Depreciation & Impairment
01-Apr-17 2,962 18,981 0 0 21,943
Depreciation charge 1,691 2,889 0 0 4,580
Acc Depreciation written off to Cost 0 0 0 0 0
Acc. Impairment written off to Cost 0 0 0 0 0
Derecognition - Disposals 0 -1,901 0 0 -1,901
Assets reclassified (to)/from Held for Sale 0 0 0 0 0
31 March 2018 4,653 19,969 0 0 24,622
Net Book Value
31 March 2018 74,522 16,367 1,399 0 92,288
31 March 2017 72,918 15,643 4,224 0 92,785
The following useful lives and depreciation rates have been used in the calculation of depreciation: Buildings - 21 to 50 years Vehicle, Plant, Furniture & Equipment - 5 to 12 years.
Main Financial Statements
Page 66 of 126 WYFRA
Capital Commitments At 31 March 2018, the Authority has entered into a number of contracts for the construction or enhancement of Property, Plant and Equipment, with outstanding commitments of £0.4m (£3.2m 31 March 2017). The major commitments are:
IRMP New Fire Station Builds: 2017/18
Wakefield £0.1m
Others:
ICTSP4 System Security £0.1m
Upgrade Training Facilities at HQ £0.2m
14. Revaluations and Impairments As stated in Note 1 Accounting Policies, section (xv), assets are carried on the Balance Sheet using the following measurement bases: - Assets under construction – historical cost - Land & buildings depreciated replacement cost with the exception of surplus land, buildings at Fire Service Headquarters and assets held for sale which are valued at market value. The Authority formally revalues land and buildings every five years with the last valuation carried out by Bruton Knowles at the 31 March 2015. There have been no revaluations or impairments in 2017/18.
2016/2017 2017/18
£'000 £'000
-2,345 Revaluation losses/Impairments Recognised in Surplus/Deficit
0
2,971 RevaIuations/(Impairments) Recognised in Revaluation Reserve
0
626 0
Main Financial Statements
Page 67 of 126 WYFRA
15. Intangible Assets
Software licences purchased in 2016/17 were included in intangible assets, however due to the
change in accounting policy these are now classed as revenue expenditure.
The carrying amount of intangible assets is amortised on a straight line basis. The amortisation of £218k charged to revenue in 2017/18 was charged to the IT support cost centre and then absorbed as an overhead across all the service headings in the Net Expenditure of Services. It is not possible to quantify exactly how much of the amortisation is attributable to each service heading.
The movement on Intangible Asset Balances during the year are as follows:
16. Assets Held for Sale
For assets to be included under this category they must meet the following criteria:
- The asset must be available for immediate sale in its present condition subject to terms that are usual and customary for sales of such assets.
- The sale must be highly probable; the appropriate level of management must be committed to a plan to sell the asset and an active programme to locate a buyer and complete the plan must have been initiated.
- The asset must be actively marketed for a sale provided that it is reasonable in
relation to its current fair value.
2016/2017 2017/2018
Software
Licences
Software
Licences
£'000 £'000
Balance at start of year:
Gross carrying amounts 2,169 1,814
Accumulated Amortisation 1,315 913
Net carrying amount at start of year 854 901
Purchases 293 16
Disposals 0 0
Amortisation for the period -246 -218
Other movements 0 0
Net carrying amount at the end of year 901 699
Comprising:
Gross Carrying Amounts 1,814 1,488
Accumulated Amortisation 913 789
901 699
Main Financial Statements
Page 68 of 126 WYFRA
- The sale should be expected to qualify for recognition as a completed sale within one year of the date of classification and action required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Current Non Current 2016/17 2017/18 2016/17 2017/18 £'000 £'000 £'000 £'000
Balance outstanding at start of year 0 0 1,937 826 Assets newly classified as held for sale
Property, Plant & Equipment 0 0 526 0
Revaluation Losses 0 0 0 0 Revaluation Gains 0 0 0 0 Other movements 0 0 -1,637 -826
Balance outstanding at year-end 0 0 826 0
There are no assets held for sale as at 31st March 2018.
Main Financial Statements
Page 69 of 126 WYFRA
17. Financial Instruments Categories of Financial Instruments The following categories of financial instruments are carried in the Balance Sheet:
Long Term Current
31-Mar-17 31-Mar-18 31-Mar-
17 31-Mar-18
£'000 £'000 £'000 £'000
Investments
Loans and receivables 0 0 7,123 12,619
Available for sale financial assets 0 0 2,647 2,977
Total Investments 0 0 9,770 15,596
Debtors
Loans and receivables 0 0 3 10
Financial assets carried at contract amounts
0 0 1,029 812
Total Debtors 0 0 1,032 822
Borrowings
Financial liabilities at amortised cost 45,839 45,604 235 274
Financial liabilities at fair value through profit and loss
0 0 0 0
Total Borrowings 45,839 45,604 235 274
Other Long Term Liabilities
Finance lease liabilities 0 0 0 0
Other Long Term Liabilities 0 0 0 0
Creditors
Financial liabilities at amortised cost 0 0 482 504
Financial liabilities carried at contract amounts
0 0
2,206 2,680
Total Creditors 0 0 2,688 3,184
Main Financial Statements
Page 70 of 126 WYFRA
Income, Expense, Gains and Losses
The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments are made up as follows:
2016/17 2017/18
Fin
anci
al L
iab
iliti
es
me
asu
red
at
amo
rtis
ed c
ost
Fi
nan
cial
Ass
ets
:
Loan
s an
d
Re
ceiv
able
s
Fin
anci
al A
sset
s:
Ava
ilab
le f
or
Sale
Cas
h a
nd
Cas
h
equ
ival
ents
Tota
l
Fin
anci
al L
iab
iliti
es
me
asu
red
at
amo
rtis
ed c
ost
Fi
nan
cial
Ass
ets
: Lo
ans
and
R
ece
ivab
les
Fin
anci
al A
sset
s:
Ava
ilab
le f
or
Sale
Cas
h a
nd
Cas
h
equ
ival
ents
Tota
l
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Interest expense 2,044 2,044 2,040 2,040 Losses on de-recognition 62 62 62 62 Total expense in surplus/deficit on the provision of services
2,106 0 0 2,106 2,102 2,102
Interest income -20 -30 -50 -65 -65 Dividend Income -26 -26 -14 -14 Gains on de-recognition Total income in surplus/deficit on the provision of services
0 -20 -26 -30 -76 -65 -14 -79
Net gain/(loss) for the year 2,106 -20 -26 -30 2,030 2,102 -65 -14 0 2,023
Fair Value of Assets and Liabilities
Financial liabilities, financial assets represented by loans and receivables and long term
debtors and creditors are disclosed in the Balance Sheet at amortised cost. Their fair value
can be assessed by calculating the present value of the cash flows that will take place over
the remaining term of the instruments, using the following assumptions:
- no early repayment or impairment is recognised.
- Where an instrument will mature in the next 12 months, the carrying amount is assumed to approximate to fair value.
- The fair value of trade and other receivables is taken to be the invoiced or billed amount.
Main Financial Statements
Page 71 of 126 WYFRA
The fair values calculated are as follows:
Loans from the Public Works Loan Board (PWLB) have been valued by discounting the
contractual cash flows over the life of the investment at the appropriate market rate for
local authority loans
The value of Lenders option, Borrowers option loans have been increased by the value of
the embedded options. Which is based on the assumption that lenders will only exercise
their options when market rates have been above the contracted loan rate.
The fair value of the liabilities is more than the carrying amount because the Authority's
portfolio of loans includes a number of fixed rate loans where the interest rate payable is
higher than the rates available for similar loans at the Balance Sheet date.
This shows a notional future loss (based on economic conditions at 31 March 2018) arising from a commitment to pay interest to lenders above current market rates. The classes of financial assets and liabilities sit within the fair value hierarchy as defined below:
- Level 1 – Fair value is only derived from quoted prices in active markets for identical assets or liabilities (e.g. bond prices).
- Level 2 – Fair value is calculated from inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates or yields or similar instruments).
- Level 3 – Fair value is determined using unobservable inputs (e.g. non-market datea
such as cash flow forecasts or estimated creditworthiness).
The above fair values are judged to be level 2 in the fair value hierarchy, using significant observable inputs.
Car
ryin
g
Am
ou
nt
Fair
Val
ue
Car
ryin
g
Am
ou
nt
Fair
Val
ue
£'000 £'000 £'000 £'000 £'000 £'000
Financial Liabilities 46,557 66,705 46,382 64,025
Long term Creditors 2,206 2,206 2,680 2,680
Short term Creditors
31-Mar-1831-Mar-17
Main Financial Statements
Page 72 of 126 WYFRA
For short-term debtors and creditors, it is assumed that the carrying value will be a
reasonable approximation of fair value.
The carrying amount of loans and receivables is deemed to be approximate to fair value
because of the relatively short periods to maturity.
Car
ryin
g
Am
ou
nt
Fair
Val
ue
Car
ryin
g
Am
ou
nt
Fair
Val
ue
£'000 £'000 £'000 £'000 £'000 £'000
Loans and receivables 9,773 9,776 15,606 15,608
Long term debtors 1,029 1,029 812 812
Short term debtors
31-Mar-1831-Mar-17
Main Financial Statements
Page 73 of 126 WYFRA
18. Nature and Extent of Risks arising from Financial Instruments
The Authority's activities expose it to a variety of financial risks:
a. Credit risk - the possibility that other parties might fail to pay amounts due to the Authority;
b. Liquidity risk - the possibility that the Authority might not have funds available to meet
its commitments to make payments; and
c. Market risk - the possibility that financial loss might arise for the Authority as a result of
changes in such measures as interest rates and stock market movements.
The Authority's overall risk management programme focuses on minimising any potential
adverse effects on the resources available to fund services. The procedures are set out
through a legal framework in the Local Government Act 2003 and associated regulations.
These require the Authority to comply with the CIPFA Prudential Code, the CIPFA Treasury
Management in the Public Services Code and investment guidance issued under the Act.
Kirklees Council manages the function on behalf of the Authority under the supervision of
the Chief Financial & Procurement Officer and policies approved by Members in the annual
treasury management strategy and the treasury management policy statement and
practices.
Credit Risk Investments and Cash
Credit risk arises from deposits with banks and other financial institutions as well as credit
exposures to the Authority’s customers. Deposits were not made with banks and other
financial institutions unless they were rated by one of the main credit rating companies with
a minimum rating of F1 (Fitch) and P-1 (Moody’s) or where a building society with assets of
more than £1 billion. The Authority has a policy of not lending more than £6 million of its
surplus balances to any commercial counterparty and does not make commitments of
longer than one year.
At the year end, the Authority held cash deposits at banks and other financial institutions of
£4.6m (£4.8m 31st March 2017) had shares in Money Market Funds of £11.0m (£4.9m 31st
March 2017) as well as some longer term and fixed term deposits. The Authority has instant
access to the cash deposits and the shares in the Money Market Funds. The Authority did
not make any investments longer than one year in 2017/18
Main Financial Statements
Page 74 of 126 WYFRA
The table below summarises the credit risk exposures of the Authority's investment
portfolio by credit rating
The Authority’s maximum exposure to credit risk in relation to its investments in UK banks
or building societies cannot be assessed generally as the risk of any institution failing to
make interest payments or repay the principal sum will be specific to each institution.
Recent experience has shown that it is rare for such entities to be unable to meet their
commitments. A risk of irrecoverability applies to all of the Authority’s deposits but there
was no evidence at the 31st March that this was likely to crystallise.
Customers The Authority does not allow credit for customers but due to the nature of some of the
services provided by the Authority, payment prior to the service being carried out is highly
unlikely.
Liquidity Risk As well as keeping cash in instant access deposit accounts, the Authority has ready access to
borrowings from the Public Works Loans Board. Because of this, there is no significant risk
that it will be unable to raise finance to meet its commitments. Instead the risk is that the
Authority will be bound to replenish its borrowings at less favourable rates or, alternatively,
liquidate its investments at more favourable rates. The strategy is to ensure that the loan
repayment profile is even with no more than 20% of loans due to mature in one year.
31 March 2017 31 March 2018
£'000 £'000
F1/P1 6,000 1,025
F1+/P1 824 6
F1+/- 300 11,588
AA+ 2,646 2,977
Total Investments 9,770 15,596
Credit rating
Short Term
31 March 2017 31 March 2018
£'000 £'000
Less than three months 53 85
Three to six months 12 17
Six months to one year 77 14
More than one year 0 48
142 164
Credit Risk
Main Financial Statements
Page 75 of 126 WYFRA
The maturity analysis of borrowing is shown below:
Liquidity Risk 31 March 2017 31 March 2018
£'000 £'000
Less than one year 235 274
Between one and two years 236 235
Between two and five years 431 1,432
Between five and ten years 5,735 5,500 Between ten years and fifteen years
3,500 3,000
More than fifteen years 33,937 33,437
44,074 43,878
Uncertain date 2,000 2,000
The Authority has a £2 million “Lenders Option, Borrowers Option “(LOBO) loan where the
lender has the option to propose an increase in the rate payable. The Authority will then
have the option to accept the new rate or repay the loan without penalty. Due to low
current interest rates, in the unlikely event that the lender exercises its option, the
Authority is likely to repay the loan. The maturity date is therefore uncertain.
Market Risk Interest Rate Risk
The Authority is exposed to significant risk in terms of its exposure to interest rate
movements in particular on borrowings. Movements in interest rates have a complex
impact on the Authority. For instance, a rise in interest rates would have the following
effects:
o Borrowings at variable rates - the interest expense charged to the surplus/deficit on the
provision of services will rise.
o Borrowings at fixed rates - the fair value of liabilities will fall.
o Investments at variable rates - the interest income credited to the surplus/deficit on the provision of services will rise.
o Investments at fixed rates - the fair value of the assets will fall. Borrowings are not carried at fair value, so nominal gains and losses on fixed rate
borrowings would not impact on the surplus or deficit on the provision of service or the
Main Financial Statements
Page 76 of 126 WYFRA
Comprehensive Income & Expenditure Statement. However, changes in interest payable
and receivable on variable rate borrowings and investments will be posted to the surplus or
deficit on the provision of service and affect the general fund balance.
The Authority has a number of strategies for managing interest rate risk. Policy is to aim to
keep a maximum of 40% of its borrowings in variable rate loans. During periods of falling
interest rates, and where economic circumstances makes it favourable, fixed rate loans will
be repaid early to limit exposure to losses. The risk of loss is ameliorated by the fact that a
proportion of government grant payable on financing costs will normally move with
prevailing interest rates and provide compensation for a proportion of any higher borrowing
costs.
The treasury management strategy is proactive, providing for the constant assessment of
interest rate exposures and deciding whether new borrowing is at fixed or variable rates.
This strategy also aims to mitigate the impact of interest rate risk by setting upper limits on
its net exposure to fixed and variable interest rates. At the 31 March 2018, £43.9 million of
borrowing was at fixed rates and most investments held by the Authority for cash flow
purposes were at variable rates but with the benefit of instant access. Whilst the interest
rates on these deposits are variable, the sums invested are not significant to be affected by
any change in interest rates.
If interest rates had been 1% higher with all other variables held constant, the financial effect would be an additional interest received of £219k resulting in a corresponding £219k decrease on Surplus or Deficit on the Provision of Services.
£000
Increase in interest payable on variable rate borrowings 0
-219
-219
Increase in interest receivable on variable rate
Impact on Surplus or Deficit on the Provision of Services
The approximate impact of a 1% fall in interest rates would be as above but with the movements being reversed. As mentioned previously, the Authority also holds £2.0m of debt in the form of LOBO, which
equates to 4.4% of its total borrowing. The LOBO agreement has a periodic option date on
which the lender can opt to change the interest rate on a loan. If lenders exercise this
option, then the Authority can either repay the loan (at no extra cost) or agree to the
change of interest rate for the remaining term of the loan or until the lender chooses to
exercise the option again. The Option cannot be exercised again until 2021/22.
The fair value of fixed rate borrowings would decrease by around £10.4 million if interest
rates increased by 1%, and increase by the same figure if rates decreased by 1%.
Main Financial Statements
Page 77 of 126 WYFRA
Price Risk The Authority does not invest in equity shares and consequently is not exposed to losses
arising from movements in the prices of shares.
Foreign Exchange Risk The Authority has no financial assets or liabilities denominated in foreign currencies and
thus have no exposure to loss arising from movements in exchange rates.
19. Inventories
Inventories (stock) are materials or supplies that will be used in producing goods or
providing services or distributed as part of the Authority’s ordinary business.
2016/17
Clothing &
Uniforms
Operational
Equipment
Petrol &
Derv
Vehicle
SparesTotal
£'000 £'000 £'000 £'000 £'000
Balance Outstanding at start of
year
77 351 63 144 635
Purchases 5 36 41
Recognised as an expense in
the year
5 5
Balance Outstanding at year end 82 387 63 139 671
2017/18
Clothing &
Uniforms
Operational
Equipment
Petrol &
Derv
Vehicle
SparesTotal
£'000 £'000 £'000 £'000 £'000
Balance Outstanding at start of
year
82 387 63 139 671
Purchases 25 58 4 27 114
Recognised as an expense in
the year
Balance Outstanding at year end 107 445 67 166 785
Main Financial Statements
Page 78 of 126 WYFRA
20. Short Term Debtors
The Authority has made a provision for bad debts in 2017/18 of £3,154k (2016/17 £2,853k)
which is due to the changes in the accounting for the Collection Fund and Business Rates
Retention, whereby a provision is made for the Authority's proportion of council tax and
business rate payers' bad debts.
21. Cash and Cash Equivalents
The balance of Cash and Cash Equivalents is made up of the following elements:
31 March 2017 31 March 2018
£'000 £'000
3,132 Central Government Bodies 4,030
11,642 Other Local Authorities 12,242
33 NHS Bodies 12
0 Public Corporations and trading funds 0
947 Other entities and individuals 739
15,754 Total Short Term Debtors 17,023
31 March 2017 31 March 2018
£'000 £'000
832 Bank current accounts 15
3,988 Instant Access interest accounts and
Money Market Funds
4,604
-392 Bank Overdraft -470
4,428 Total Cash and Cash Equivalents 4,149
Main Financial Statements
Page 79 of 126 WYFRA
22. Cash Flow Statement - Operating Activities
The surplus or deficit on the provision of services has been adjusted for the following non-
cash movements.
31 March 2017 31 March 2018 £'000 £'000
4,423 Depreciation 4,628
2,670 Impairment and downward valuations 2,030
217 Amortisation 171
152 Increase/(decrease) in impairment for bad debts 301
625 Increase/(decrease) in creditors 820
473 (Increase)/decrease in debtors 450
-36 (Increase)/decrease in inventories -114
15,046 Movement in pension liability 15,538
2,370
Carrying amount of non-current assets and non-current assets held for sale, sold or derecognised
807
-224
Other non-cash items charged to the net surplus or
deficit on the provision of services 230
25,716 24,861
The surplus or deficit on the provision of services has been adjusted for the following items
that are investing and financing activities.
31 March 2017 31 March 2018
£'000 £'000
0 Proceeds from short-term (not considered to be
cash equivalents) and long-term investments
(includes investments in associates, joint
ventures and subsidiaries)
0
-2,304 Proceeds from the sale of property, plant and
equipment, investment property and intangible
assets
-3,359
0 Any other items for which the cash effects are
investing or financing cash flows
0
-2,304 -3,359
Main Financial Statements
Page 80 of 126 WYFRA
23. Cash Flow Statement - Investing Activities
31 March
2017
31 March 2018
£'000 £'000
-8,393 Purchase of property, plant and equipment, investment property and intangible assets
-5,898
-4,965 Purchase of short-term and long-term investments -6,035
0 Other payments for investing activities 0
2,304 Proceeds from the sale of property, plant and equipment, investment property and intangible assets
3,359
0 Proceeds from short-term and long-term investments 0
14 Other receipts from investing activities 0
-11,040 Net cash flows from investing activities -8,574
24. Cash Flow Statement - Financing Activities
31 March 2017
31 March 2018
£000 £000
0 Cash receipts of short- and long-term borrowing 0
0 Other receipts from financing activities 0
0
Cash payments for the reduction of outstanding liabilities relating to finance leases and on-Balance-
Sheet PFI contracts
0
-235 Repayments of short- and long-term borrowing -196
-2,701 Other payments for financing activities -1,291
-2,936 Net cash flows from financing activities -1,487
Main Financial Statements
Page 81 of 126 WYFRA
25. Short Term Creditors
The table below shows the amount of short term creditors as at the 31 March 2018:
31 March 2017
31 March 2018
Restated
£'000 £'000
2,533 Central Government Bodies 3,085
5,419 Other Local Authorities 5,948
8 NHS Bodies 7
0 Public Corporations and trading funds 6
894 Other entities and individuals 1,246
8,854 Total Short Term Creditors 10,292
26. Provisions
Ou
tsta
nd
ing
Lega
l Cas
es
P
en
sio
nab
le
Pay
SA
P L
ice
nce
U
nd
erp
aym
en
t
Oth
er
Pro
visi
on
s
Ho
liday
Pay
Tota
l
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2017 179 28 0 21 34 262
Additional Provisions made in 2017/18
130 189 319
Amounts used in 2017/18 -54 -34 -88
Transfers out
Balance at 31 March 2018 179 104 189 21 0 493
Main Financial Statements
Page 82 of 126 WYFRA
The purpose and operation of the provisions are described below:
Outstanding Legal Cases
A former insurer for the Authority, Municipal Mutual Insurance (MMI) is running down its
business, whilst paying agreed claims in full. MMI has, however, entered into a Scheme of
Arrangement in cases of insolvency, which would involve a levy against claims and future
payments.
Pensionable Pay
Following the High Court Decision in the Norman v Cheshire case, the Authority has
approved that some allowances payable to firefighters will become pensionable. This
resulted in an additional on-going annual employer pension cost of £118k, with £475k being
owed in back pension payments. During 2017/18 £54k was paid in back pensionable pay
employer contributions.
Other Provisions
Following the payment of the amounts owing under the Part-Time Workers (Prevention of
less Favourable Treatment) regulations in June 2012 there is an amount outstanding relating
to tax and national insurance liabilities relating to this payment. The payment of National
Insurance has been paid over to HMRC but there is still an outstanding liability for tax whose
payment is currently in dispute.
Holiday Pay
The outstanding balance of £34k on this provision has been written back to the revenue
account. This is because this provision is no longer required as no further payments will be
made.
SAP Licence underpayment
The Authority is currently in dispute with SAP who provides software support for our HR
system. Although the extent of the liability has been determined by the application of the
Limitations Act, the date of settlement and the actual amount to be paid has yet to be
agreed.
Main Financial Statements
Page 83 of 126 WYFRA
27. Usable Reserves
Usable reserves can be used to fund and support the Authority's expenditure in future
years. Movements in the Authority's usable reserves are detailed in the Movement in
Reserves Statement together with Note 28.
31 March 2017
31 March 2018
Restated
£'000 £'000
14,627 General Fund 14,388
Earmarked Reserves:
27 Council Tax Reform 27
40 Body Bag Decontamination 40
10,473 Capital Finance Reserve 10,472
81 Leap Year Fund 121
563 Control Room 563
27 New Risks 0
202 Enhanced Logistics 202
329 Insurance Claims 406
798 Service Support 546
2,166 Pensions Equalisation 2,961
2,363 Reserve for Pay and Prices 4,627
863 Business Rate Appeals 1,101
23 Data Transparancy 31
0 ESMCP 258
17,955 Total Earmarked Reserves 21,355
32,582 Total Useable Reserves 35,743
Note 28 gives an explanation of each reserve
Main Financial Statements
Page 84 of 126 WYFRA
28. Transfers to/from Earmarked Reserves
This note sets out the amounts set aside from the General Fund in earmarked reserves to
provide financing for future expenditure plans.
The purpose and operation of the reserves are described below:
Council Tax Reform
This is a grant from Central Government that is to be used for costs relating to the changes
in council tax which came into effect in April 2014.
Body Bag Decontamination
This is a grant from Central Government for Urban Search and Rescue equipment purchases.
Leap Year
In order to spread the cost of the extra day relating to a leap year, an amount is set aside
each year to cover this additional cost.
Control Room
This reserve holds the grant from Central Government for the purchase of a New Control
System. West Yorkshire Fire and Rescue and South Yorkshire Fire and Rescue have jointly
purchased the new system and the grant of £3.6million is for both Authorities. The system
went live in November 2014 and it is expected that the remainder of the grant will be spent
during 2018/19
Balance
at
01/04/16
Transfers
out
2016/17
Transfers
in
2016/17
Balance
at
31/03/17
Transfers
out
2017/18
Transfers
in
2017/18
Balance
at
31/03/18
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Earmarked Reserve:
Council Tax Reform Credits 27 27 27
Body Bag decontamination 40 40 40
Property and Equipment 0 0 0
Leap Year Payments 41 40 81 40 121
Control Room 563 563 563
New Risks 27 27 -27 0
Enhanced Logistics 204 -2 202 202
Insurance Claims 329 329 77 406
Service Support Reserve 560 238 798 -252 546
Pension Equalisation Reserve 1,347 819 2,166 795 2,961
Reserve for pay and prices 1,883 480 2,363 2,264 4,627
Business Rate Appeals 630 233 863 238 1,101
Transparency 15 8 23 8 31
Capital Finance Reserve 0 10,473 10,473 -756 755 10,472
ESMCP 0 0 0 258 258
Total 5,666 -2 12,291 17,955 -1,035 4,435 21,355
Main Financial Statements
Page 85 of 126 WYFRA
Capital Finance Reserve
This reserve is used to manage future variations in the cost of financing the capital plan.
New Risks
This is Central Government grant for the purchase of specific equipment. This reserve has
been fully expended in 2017/18.
Enhanced Logistics
This is Central Government grant for the purchase of specific equipment, which has been
used to build a new command Unit which became operational in March 2015.
Insurance Claims
This reserve holds the income received from an insurance claim in 2013/14 and an amount
put aside in 2014/15 for future resilience which will be utilised for any uninsured claims that
the Authority may face in future years. An additional £77k was transferred to this reserve
during 2017/18, which represents the underspend on the amount budgeted for uninsured
insurance claims in 2017/18.
Service Support
Due to the changing nature of the service, the service support reserve was established to
fund any expenditure that may be required in order to enable service developments that
are not built within the current revenue budget. The restructure of the ICT department in
2017/18 resulted in redundancy payments of £251k. These were charged to this reserve.
Pensions Equalisation
This reserve enables the Authority to manage the cost of ill health retirements. Any budget
under spending on ill health retirements are credited to the reserve and if, in a financial year
there are more ill health retirements than estimated these will be charged against this
reserve providing there are sufficient balances available. £794k was transferred to this
reserve during 2017/18.
Reserve for Pay and Prices
This reserve will enable the Authority to manage expenditure increases in future years due
to changes in pay awards and inflation.
Main Financial Statements
Page 86 of 126 WYFRA
Emergency Service Mobile Communications Programme ( ESMCP)
A new reserve has been created in 2017/18 to recognise potential risk of the ESMCP project
not being funded after 2020, which is secured by Central Government in this date. £258k
has been transferred from the general fund to the new ESMCP reserve.
Business Rate Appeals
The Authority receives grant from Central Government to enable the management of
business rate appeals.
Data Transparency
The Authority received grant from Central Government to enable systems to be put in place
for the provision of data transparency.
29. Unusable Reserves The summary of the unusable reserves can be found in the Balance Sheet, below is a detailed list of the unusable reserves of the Authority. Unusable reserves cannot be used to fund future expenditure by the Authority. 31 March 2017 31 March 2018
£'000 £'000
9,592 Revaluation Reserve 7,388
20,807 Capital Adjustment Account 23,190
-749 Financial Instruments Adjustment Account -687
-1,380,217 Pensions Reserve -1,394,592
-171 Collection Fund Adjustment Account 274
-278 Accumulating Compensated Absences Adjustment Account -307
-1,351,016 Total Unusable Reserves -1,364,734
Revaluation Reserve
The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment (and Intangible Assets). The balance is reduced when assets with accumulated gains are: - re-valued downwards or impaired and the gains are lost
- used in the provision of services and the gains are consumed through depreciation, or
- disposed of and the gains are realised.
Main Financial Statements
Page 87 of 126 WYFRA
The reserve contains only revaluation gains accumulated since 1 April 2007, the date that the reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.
Capital Adjustment Account
The Capital Adjustment Account absorbs the timing differences arising from the different
arrangements for accounting for the consumption of non-current assets and for financing
the acquisition, construction or enhancement of those assets under statutory provisions.
The account is debited with the cost of acquisition, construction or enhancement as
depreciation, impairment losses and amortisations are charged to the Comprehensive
Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve
to convert fair value figures to a historical cost basis). The account is credited with the
amounts set aside by the Authority as finance for the costs of acquisition, construction and
enhancement.
The following note details the source of all the transactions posted to the Account, apart
from those involving the Revaluation Reserve.
2016/17 2017/18
£'000 £'000
7,111 Balance at 1 April 9,592
-165 Difference between fair value depreciation and historical cost
depreciation
-174
-325 Transfer to Capital Adjustment Account for disposed assets -2,030
-490 Amount written off to the Capital Adjustment Account -2,204
-789 Downward Revaluations 0
3,760 Upward Revaluations 0
9,592 Balance at 31 March 7,388
Main Financial Statements
Page 88 of 126 WYFRA
2016/17 2017/18
£'000 £'000
23,948 Balance as at 1 April 20,807
Adjustment to Opening Balance
23,948 20,807
Reversal of items relating to capital expenditure debited or
credited to the Comprehensive Income and Expenditure
Statement:
-4,423 - charges for depreciation and impairment of non current
assets
-4,581
-2,978 - revaluation losses on property, plant and equipment 0
633 - revaluation gains on property, plant and equipment 0
-217 - amortisation of intangible assets -218
-684 - revenue expenditure funded from capital under statute -462
-2,370 - amounts of non current assets written off on disposal or sale
as part of the gain/loss on disposal to the Comprehensive
Income and Expenditure Statement
-807
-10,039 -6,068
165 Adjusting amounts written out of the Revaluation Reserve 174
-9,874 Net written out amount of the cost of non current assets
consumed in the year
-5,894
Capital financing applied in the year:
2,304 - use of the Capital Receipts Reserve to finance new capital
expenditure
3,359
2 - capital grants and contributions credited to the
Comprehensive Income and Expenditure Statement that have
been applied to capital financing
791
4,427 - statutory provision for the financing of capital investment
charged against the General Fund
4,127
6,733 8,277
20,807 Balance as at 31 March 23,190
Main Financial Statements
Page 89 of 126 WYFRA
Financial Instruments Adjustment Account The Financial Instruments Adjustment Account absorbs the timing differences arising from
the different arrangements for accounting for income and expenses relating to certain
financial instruments and for bearing losses or benefiting from gains per statutory
provisions.
The Authority uses the account to manage premiums paid on the early redemption of loans.
Premiums are debited to the Comprehensive Income and Expenditure Statement when they
are incurred, but reversed out of the General Fund Balance to the Movement in Reserves
Statement. Over time, the expense is posted back to the General Fund Balance in
accordance with statutory arrangements for spreading the burden on council tax. In the
Authority's case, this period is the unexpired term that was outstanding on the loans when
they were redeemed.
As a result, the balance on the Account at 31 March 2018 will be charged to the General
Fund in future years.
Pensions Reserve The Pensions Reserve absorbs the timing differences arising from the different
arrangements for accounting for post-employment benefits and for funding benefits in
accordance with statutory provisions.
The Authority accounts for post-employment benefits in the Comprehensive Income and
Expenditure Statement as the benefits are earned by employees accruing years of service,
updating the liabilities recognised to reflect inflation, changing assumptions and investment
returns on any resources set aside to meet the costs. However, statutory arrangements
require benefits earned to be financed as the Authority makes employer's contributions to
pension funds or eventually pays any pensions for which it is directly responsible.
The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the
benefits earned by past and current employees and the resources the Authority has set
2016/17 2017/18
£'000 £'000
-810 Balance as at 1 April -749
61 Amount by which finance costs charged to the Comprehensive
Income and Expenditure Statement are different from finance
costs chargeable in the year in accordance with statutory
requirements
62
-749 Balance as at 31 March -687
Main Financial Statements
Page 90 of 126 WYFRA
aside to meet them. The statutory arrangements will ensure that funding will have been set
aside by the time the benefits come to be paid.
2016/17 2017/18
£'000 £'000
-1,142,798 Balance at 1 April -1,380,217
-222,373 Re-measurements of the net defined liability/(asset) 1,163
-59,221 Reversal of items relating to retirement benefits debited or
credited to the Surplus or Deficit on the Provision of Services
in the Comprehensive Income and Expenditure Statement
-61,122
44,175 Employer's pensions contributions and direct payments to
pensioners payable in the year
45,584
-1,380,217 Balance as at 31 March -1,394,592
Collection Fund Adjustment Account The Collection Fund Adjustment Account manages the differences arising from the
recognition of council tax income in the Comprehensive Income and Expenditure Statement
as it falls due from council tax payers and non-domestic rate payers compared with the
statutory arrangements for paying across amounts to the General Fund from the Collection
Fund.
2016/17 2017/18
£'000 £'000
-471 Balance at 1 April -171
300
Amount by which council tax income credited to the Comprehensive Income and Expenditure Statement is different from council tax and non-domestic rate income calculated for
the year in accordance with statutory requirements
445
-171 Balance as at 31 March 274
Main Financial Statements
Page 91 of 126 WYFRA
Accumulating Compensated Absences Adjustment Account The Accumulating Compensated Absences Adjustment Account absorbs the differences that
would otherwise arise on the General Fund Balance from accruing for compensated
absences earned but not taken in the year e.g. Annual leave entitlement carried forward at
31 March. Statutory arrangements require that the impact on the General Fund Balance is
neutralised by transfers to or from the Account.
2016/17 2017/18 £'000 £'000
-69 Balance at 1 April -278
69 Settlement or cancellation of accrual made at the end of the preceding year
278
0 0
-69 Amounts accrued at the end of the current year -278
-209 Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an
accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements.
-29
-278 Balance as at 31 March -307
30. Members’ Allowances
The Authority paid the following allowances and expenses to Members of the Fire Authority
during the year.
2016/17 2017/18
£'000 £'000
129 Allowances 132
7 Expenses 6
136 138
Main Financial Statements
Page 92 of 126 WYFRA
31. Officers’ Remunerations
The Remuneration paid to the Authority's senior employees is as follows:
Notes
1. The Director of Service Support retired on the 2nd October 2017. The directorate was
restructured and the new Director of Service was employed on a revised remuneration
package.
2. The Chief Finance and Procurement Officer retired on 16th July 2017. The new Chief Finance and Procurement Officer was seconded to the post on a 12 month fixed term contract commencing 17th July 2017.
Post Holder Information Year
Salary
(including
fees &
allowances
BonusesExpense
Allowances
Benefits in
Kind (lease
car
benchmark)
Total
Remuneration
excluding
pensions
contributions
Employer
Pension
Contributions
Total
Remuneration
including
pensions
contributions
Chief Fire Officer / Chief
Executive2016/17 £135,695 £0 £1,038 £7,224 £143,957 £0 £143,957
2016/17 £28,849 £0 £120 £6,520 £35,489 £4,125 £39,615
John Roberts 2017/18 £152,541 £0 £1,122 £6,520 £160,183 £21,813 £181,996
Director Of Service
Delivery2016/17 £128,667 £0 £1,277 £6,351 £136,295 £27,921 £164,216
2017/18 £133,247 £0 £1,447 £6,351 £141,045 £28,915 £169,960
Director of Service
Support2016/17 £126,490 £0 £1,171 £6,351 £134,012 £27,448 £161,460
(Note 1) 2017/18 £60,183 £0 £1,003 £6,351 £67,537 £13,060 £80,597
2017/18 £60,788 £0 £325 £6,345 £67,458 £13,191 £80,649
Chief Legal & Governance Officer2016/17 £72,833 £0 £314 £4,536 £77,683 £10,857 £88,540
2017/18 £73,558 £0 £850 £4,536 £78,944 £13,353 £92,297
Chief Finance &
Procurement Officer2016/17 £59,992 £0 £377 £4,536 £64,905 £9,064 £73,969
(Note 2) 2017/18 £16,678 £0 £71 £4,536 £21,285 £2,902 £24,187
2017/18 £55,118 £0 £149 £4,531 £59,798 £9,480 £69,278
Chief Employment
Services Officer2016/17 £75,701 £0 £346 £4,536 £80,583 £10,687 £91,270
2017/18 £77,856 £0 £410 £4,536 £82,802 £13,391 £96,193
Main Financial Statements
Page 93 of 126 WYFRA
The Authority's employees receiving more than £50,000 remuneration for the year
(excluding employer's pension contributions) were paid the following amounts:
Remuneration Band
Number of
Employees
2016/17
Number of
Employees
2017/18
£50,000 - £54,999 41 42
£55,000 - £59,999 13 12
£60,000 - £64,999 6 7
£65,000 - £69,999 1
£70,000 - £74,999
£75,000 - £79,999 3 3
£80,000 - £84,999
£85,000 - £89,999
63 65
The above numbers exclude senior officers who are included in the previous table.
32. External Audit Costs
The Authority has incurred the following costs in relation to the audit of the Statement of
Accounts by the Authority's external auditor.
2016/17 2017/18
£'000 £'000
36
Fees payable to KPMG LLP with regard to external audit services carried out by the appointed auditor
37
36 37
Main Financial Statements
Page 94 of 126 WYFRA
33. Grant Income
The Authority credited the following grants and contributions to the Comprehensive Income
and Expenditure Statement in 2017/18
2016/17
2017/18
£'000 £'000
Credited to Taxation and non specific Grant Income
37,669 Council Tax Income 39,219
14,662 NNDR Top up Grant 15,785
7,455 District Council -Business Rates Retention 6,846
21,151 BBRS Revenue Support Grant 17,528
308 Capital Grant 867
81,245 Total 80,245
Credited to Services
1,438 New Dimension Programme 1,615
22 Small Business Rate Relief 0
8 Transparancy Code set up 8
20 MTFA 28
477 Emergency Services Mobile Communications Programme 302
1,965 Total 1,953
34. Related Parties
The Authority is required to disclose material transactions with related parties - bodies or
individuals that have the potential to control or influence the Authority or to be controlled
or influenced by the Authority. Disclosure of these transactions allows readers to assess the
extent to which the Authority might have been constrained in its ability to limit another
party's ability to bargain freely with the Authority.
Central Government Central Government has a major influence over the general operations of the Authority. It is
responsible for providing the statutory framework, within which the Authority operates,
provides the majority of its funding in the form of grants and prescribes the terms of many
Main Financial Statements
Page 95 of 126 WYFRA
of the transactions that the Authority has with other parties. Grants received from Central
Government are set out in Note 12 on reporting for resource allocation decisions.
Members The Fire Authority is made up of 22 Local Councillors who are nominated by the five
constituent authorities of West Yorkshire, based on the size of the authority and the
political balance. The Fire Authority is responsible for making all decisions concerning the
functions, powers, duties and responsibilities of the Authority.
The total amount paid to Members in the form of allowances for 2017/2018 is shown in
Note 30. Each of the elected members is required to declare details of all personal interests
they have with the financial interests of the Authority including a nil return if there are no
interests. For the financial year 2017/2018 all returns were nil.
Officers The Authority requires each member of the Management Board to sign a declaration that they and close members of their family have no interest in the financial affairs of the Authority. As at the 31st March 2018 all returns were nil. Entities Controlled or Significantly Influenced by the Authority The Authority receives a number of financial services from Kirklees Council in the form of
treasury management, insurance, payroll and management of the main banking
arrangements. The Authority also receives a number of services from the council in respect
of refuse collection, building maintenance and repair. The amounts paid to Kirklees Council
in 2017/18 are detailed below:
New Control Project Collaboration
The Authority has a joint collaboration with South Yorkshire Fire & Rescue for the provision
of a command and control system.
2016/17 2017/18
£'000 £'000
177 Financial Support Services 182
6 Property Repairs 0
12 Capital Contracts 0
20 Refuse Collection 16
4 Other Services 7
219 205
Main Financial Statements
Page 96 of 126 WYFRA
35. Capital Expenditure and Financing
The total amount of capital expenditure incurred in the year is shown in the table below
(including the value of assets acquired under finance leases), together with the resources
that have been used to finance it. Where capital expenditure is to be financed in future
years by charges to revenue as assets are used by the Authority, the expenditure results in
an increase in the Capital Financing Requirement (CFR), a measure of the capital
expenditure incurred historically by the Authority that has yet to be financed. The CFR is
analysed in the second part of this note.
2016/17 2017/18
£'000 £'000
Opening Capital Financing Requirement 62,165 64,113
Adjustment to Opening Balance 0 0
Capital Investment
Property, Plant and Equipment 7,704 6,094
Intangible Assets 293 16
Revenue Expenditure Funded from Capital under Statute 684 462
Sources of Finance
Capital Receipts -2,304 -3,359
Government Grants and Contributions 0 -790
Earmarked Reserve -2 0
Sums set aside from revenue :
MRP/loan fund principal -4,427 -4,127
Closing Capital Financing Requirement 64,113 62,409
Explanation of Movement in Year
Increase in underlying need to borrow (supported by Government financial assistance)
0 0
Increase in underlying need to borrow (unsupported by Government financial assistance)
1,948 -1,704
Assets acquired under Finance Lease 0 0
Increase/(decrease) in Capital Financing Requirement 1,948 -1,704
Main Financial Statements
Page 97 of 126 WYFRA
36. Leases
Authority as a lessee Finance Lease The authority has no vehicles financed under terms of a finance lease. Operating Leases
The Authority uses vehicles financed under terms of an operating lease. The future
minimum lease payments due under non-cancellable leases in future years are:
The expenditure charged to the Comprehensive Income and Expenditure Statement during
the year in relation to these leases was:
2016/17 2017/18
£'000 £'000
Minimum lease payments 926 757
926 757
The Authority has identified the use of phone lines as being under the terms of an operating
lease under IFRS. These items have not been included within the calculation as the
Authority has been unable to place a value on these leases.
31 March
2017
31 March
2018
£'000 £'000
Not later than one year 220 141 Later than one year but not later
than five years598 687
Later than five years - -
818 828
Main Financial Statements
Page 98 of 126 WYFRA
37. Termination Benefits The Authority terminated the contracts of three employees in 2017/18, as a result of the
restructure of the ICT department.
Details of these payments by bands are detailed in the table below.
Exit package cost
band (including
special payments)
2016/17 2017/18 2016/17 2017/18 2016/17 2017/18 2016/17 2017/18
£ £
£0 - £20,000 - - 2 1 2 1 15,423 9,253
£20,001 - £40,000 - - 1 1 1 1 35,918 34,866
£40,001 - £60,000 - - - - - - - -
£60,001 - £80,000 - - - - - - - -
£80,001 - £100,000 - - - - - - - -
£100,001 - £150,000 - - - - - - - -
£150,0001 + - - - 1 - 1 - 207,327
TOTAL - - 3 3 3 3 51,341 251,446
Number of
Compulsory
redundancies
Number of other
departures
agreed
Total number of
exit packages by
cost band
Total cost of exit
packages in each
band
Termination benefits are comprised of redundancy costs and the cost relating to enhanced early pension contributions.
This is summarised in the table below:
2016/17 2017/18
£ £
Redundancy Costs 45,771 99,379
Enhanced Pension Costs 5,570 152,067
TOTAL 51,341 251,446
Main Financial Statements
Page 99 of 126 WYFRA
38. Defined Benefit Pension Schemes
Participation in Pension Schemes As part of the terms and conditions of employment of its officers the Authority makes
contributions towards the cost of post-employment benefits. Although these benefits will
not actually be payable until the employees retire, the Authority has a commitment to make
the payments that needs to be disclosed at the time that employees earn their future
entitlement. The Authority participates in two types of pension scheme:
a) The Local Government Pension Scheme (LGPS), administered locally by West Yorkshire
Pension Fund - this is a funded defined benefit plan with benefits earned up to 31 March 2014 being linked to final salary, and those after 31 March 2014 are based on a Career Average Revalued Earnings scheme. The funding nature of the LGPS requires participating employers and its employees to pay contributions into the Fund, calculated at a level intended to balance the pension’s liabilities with investment assets.
b) The Firefighters’ Pension Scheme, administered by West Yorkshire Pension Fund - these are unfunded schemes whereby current pensions are paid from current contributions and as such there are no assets only liabilities. Both the Authority and the employee make contributions to the fund with the shortfall being funded by Central Government in the form of a pension Top up Grant.
The following Firefighters Pension Schemes are currently administered by the Authority:
i. Firefighters Pension Scheme 1992 (FPS) operated under the Firefighters Pension
Scheme (Amendment) (No 2) (England) Order 2006.
ii. New Firefighters Pension Scheme 2006 (NFPS) operated under the Firefighters
Pension Scheme (England) Order 2006.
iii. The Firefighters Pension Scheme 2015 as set out in the Firefighters Pension
Scheme (England) Regulations 2014 (SI 2014/2848).
iv. The Retained Modified Pension Scheme – firefighters who are employed as a
retained firefighter during the period 1 July 2000 to 5 April 2006 are eligible to
join this scheme. It is a modified section of the 2006 scheme with different
benefits. Employees are able to pay the historic contributions for the qualifying
period.
Injury Allowance - The Firefighters’ Compensation Scheme 2006
This is for those employees that left employment with the Authority on ill health and is
administered in the same manner as the above two schemes. Injury Awards and awards
payable on the death of a firefighter attributable to a qualifying injury are not part of the
Firefighters’ Pension Scheme because they are payable irrespective of whether an employee
is a member of the scheme. New tax rules with effect from 1st April 2006 prevent Injury
Awards from being part of the Pension Scheme Regulations and the opportunity was taken
Main Financial Statements
Page 100 of 126 WYFRA
to move the Injury Awards into a separate Firefighters’ Compensation Scheme 2006 with all
injury awards previously covered by the FPS being paid from the Authority’s Income and
Expenditure account, not the Pension Fund.
Transactions Relating to Retirement and Injury Benefits The Authority recognises the cost of retirement benefits in the reported cost of services
when they are earned by employees, rather than when the benefits are eventually paid as
pensions. However, the charge the Authority is required to make against council tax is
based on the cash payable in the year, so the real cost of post-employment/retirement
benefits is reversed out of the General Fund via the Movement in Reserves Statement
during the year.
The following transactions have been made in the Comprehensive Income and Expenditure
Statement and the General Fund Balance via the Movement in Reserves Statement during
the year:
Main Financial Statements
Page 101 of 126 WYFRA
2016/17
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2016/17 2016/17 2016/17 2016/17 2016/17 2016/17
£'000 £'000 £'000 £'000 £'000 £'000
Service Cost Comprising:
Current Service Cost -1,699 -6,150 -240 -6,150 -340 -14,579
Cost covered by employee contributions -1,960 -100 -2,520 -4,580
Past Service Cost -6 -6
(Gain) Loss on curtailments
Financing and Investment Income and
Expenditure:
Net Interest Expense -590 -37,020 -1,170 -430 -870 -40,080
Total Post Employment Benefits charged
to the surplus or deficit on the Provision
of Services
-2,295 -45,130 -1,510 -9,100 -1,210 -59,245
Other Post employment Benefits
charged to the Comprehensive Income
and Expenditure Statement:
Re-measurement of the net defined
benefit liability comprising:
Return on plan assets (excluding the
amount included in net interest)
7,957 7,957
Actuarial gains and losses arising on
changes in demographic assumptions
2,113 14,890 60 1,160 18,223
Actuarial gains and losses underlying the
present value of the retained
settlement
Actuarial gains and losses arising on
changes in financial assumptions
-14,664 -214,820 -15,490 -7,430 -3,860 -256,264
Actuarial gains and losses due to liability
experience
2,491 4,000 -10 830 400 7,711
Total Post Employment Benefits charged
to the Comprehensive Income and
Expenditure Statement
-2,103 -195,930 -15,440 -6,600 -2,300 -222,373
TOTAL AMOUNT RECOGNISED -4,398 -241,060 -16,950 -15,700 -3,510 -281,618
Comprehensive Income & Expenditure
Statement - 2016/17
Main Financial Statements
Page 102 of 126 WYFRA
2017/18
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2017/18 2017/18 2017/18 2017/18 2017/18 2017/18
£'000 £'000 £'000 £'000 £'000 £'000
Service Cost Comprising:
Current Service Cost -2,208 -6,320 -200 -10,310 -330 -19,368
Cost covered by employee contributions -1,550 -110 -2,770 -4,430
Past Service Cost -182 -880 -1,062
(Gain) Loss on curtailments
Financing and Investment Income and
Expenditure:
Net Interest Expense -532 -32,910 -1,320 -790 -710 -36,262
Total Post Employment Benefits charged
to the surplus or deficit on the Provision
of Services
-2,922 -41,660 -1,630 -13,870 -1,040 -61,122
Other Post employment Benefits
charged to the Comprehensive Income
and Expenditure Statement:
Re-measurement of the net defined
benefit liability comprising:
Return on plan assets (excluding the
amount included in net interest)
628 628
Actuarial gains and losses arising on
changes in demographic assumptions
32,130 1,150 1,550 990 35,820
Actuarial gains and losses underlying the
present value of the retained
settlement
Actuarial gains and losses arising on
changes in financial assumptions
-1,526 -29,640 -3,800 -180 -220
-35,366
Actuarial gains and losses due to liability
experience
-319 4,660 -1,890 130 -2,500
81
0
Total Post Employment Benefits charged
to the Comprehensive Income and
Expenditure Statement
-1,217 7,150 -4,540 1,500 -1,730 1,163
TOTAL AMOUNT RECOGNISED -4,139 -34,510 -6,170 -12,370 -2,770 -59,959
Comprehensive Income & Expenditure
Statement - 2017/18
Main Financial Statements
Page 103 of 126 WYFRA
Movement in Reserves Statement 2016/17
Movement in Reserves Statement 2017/18
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2016/17 2016/17 2016/17 2016/17 2016/17 2016/17
£'000 £'000 £'000 £'000 £'000 £'000
Reversal of net charges to the Surplus or
Deficit for the provision of services for
post employment benefits in
accordance with the code
-2,295 -45,106 -1,510 -9,100 -1,210 -59,221
Actual amount charged to the General
Fund Balance for pensions in the year:
Employer's contributions 1,159 2,868 116 2,859 1,530 8,532
Transfers In 0
Retirement benefits payable to
pensioners
38,864 80 -2,939 -362 35,643
-1,136 -3,374 -1,314 -9,180 -42 -15,046
Movement in Reserves Statement -
2016/17
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2017/18 2017/18 2017/18 2017/18 2017/18 2017/18
£'000 £'000 £'000 £'000 £'000 £'000
Reversal of net charges to the Surplus or
Deficit for the provision of services for
post employment benefits in
accordance with the code
-2,922 -41,660 -1,630 -13,870 -1,040 -61,122
Actual amount charged to the General
Fund Balance for pensions in the year:
Employer's contributions 1,454 2,265 83 3,072 1,612 8,486
Transfers In
Retirement benefits payable to
pensioners
40,069 101 -3,072 37,098
-1,468 674 -1,446 -13,870 572 -15,538
Movement in Reserves Statement -
2017/18
Main Financial Statements
Page 104 of 126 WYFRA
Pension Assets and Liabilities Recognised in the Balance Sheet The amount included in the Balance Sheet arising from the Authority's obligation in respect
of its defined benefit plans is as follows:
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
2016/17 Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2016/17 2016/17 2016/17 2016/17 2016/17 2016/17
£'000 £'000 £'000 £'000 £'000 £'000
Present Value of the defined benefit
obligation
84,425 1,258,810 49,630 23,430 27,190 1,443,485
Fair Value of plan assets -63,268 -63,268
Sub total 21,157 1,258,810 49,630 23,430 27,190 1,380,217
Other movements in the liability (asset)
if applicable
0 0 0
Net liability arising from defined benefit
obligation21,157 1,258,810 49,630 23,430 27,190 1,380,217
Included within the present value of the defined benefit obligation of the 2006 (NFPS) is an estimated liability for the Retained firefighters Modified pension’s scheme of £1.55 million.
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
2017/18 Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2017/18 2017/18 2017/18 2017/18 2017/18 2017/18
£'000 £'000 £'000 £'000 £'000 £'000
Present Value of the defined benefit
obligation
89,528 1,250,540 55,660 35,800 28,750 1,460,278
Fair Value of plan assets -65,686 -65,686
Sub total 23,842 1,250,540 55,660 35,800 28,750 1,394,592
Other movements in the liability (asset)
if applicable
0 0 0
Net liability arising from defined benefit
obligation23,842 1,250,540 55,660 35,800 28,750 1,394,592
The cumulative amount of the remeasurement of the net defined liability recognised in the Comprehensive Income and Expenditure Statement to the 31 March 2018 is a gain of £0.0012m (2016/17 loss £222.373m).
The net liability relating to the defined Benefit Pension Schemes recognised in the Balance
Sheet at 31 March 2018 is -£1,393m, which is made up of scheme liabilities -£1,460m less
scheme assets £66m (2016/17 -£1,380m).
Main Financial Statements
Page 105 of 126 WYFRA
Reconciliation of the Movements in the Fair Value of Scheme (Plan) Assets
West Yorkshire Fire & Rescue Authority employs a building block approach in determining
the rate of return on Fund assets Historical markets are studied and assets with higher
volatility are assumed to generate higher returns consistent with widely accepted capital
market principles. The assumed rate of return on each asset class is set out within this note.
The overall expected rate of return on assets is then derived by aggregating the expected
return for each asset class over the actual asset allocation for the Fund at the 31 March
2018.
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Pension Pension Pension Pension Pension
2016/17 Scheme Scheme Scheme Scheme Scheme Total
2016/17 2016/17 2016/17 2016/17 2016/17 2016/17
£'000 £'000 £'000 £'000 £'000 £'000
Opening fair value of scheme assets 54,047 54,047
Interest income 1,828 1,828
Re-measurement gain (loss):
the return on plan assets, excluding the
amount included in the net interest
expense
7,957 7,957
other (if applicable)
The effect of changes in foreign
exchange rates
Contributions from employers 1,159 1,159
Contributions from employees into the
scheme
519
519
Benefits paid -2,242 -2,242
Closing fair value of scheme assets 63,268 - - - - 63,268
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Pension Pension Pension Pension Pension
2017/18 Scheme Scheme Scheme Scheme Scheme Total
2017/18 2017/18 2017/18 2017/18 2017/18 2017/18
£'000 £'000 £'000 £'000 £'000 £'000
Opening fair value of scheme assets 63,268 63,268
Interest income 1,647 1,647
Re-measurement gain (loss):
the return on plan assets, excluding the
amount included in the net interest
expense
628
628
other (if applicable)
The effect of changes in foreign
exchange rates
Contributions from employers 1,454 1,454
Contributions from employees into the
scheme
495
495
Benefits paid -1,806 -1,806
Closing fair value of scheme assets 65,686 0 0 0 0 65,686
Main Financial Statements
Page 106 of 126 WYFRA
Reconciliation of Present Value of the Scheme Liabilities (Defined Benefit Obligations)
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
2016/17 Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2016/17 2016/17 2016/17 2016/17 2016/17 2016/17
£'000 £'000 £'000 £'000 £'000 £'000
Opening Balance at 1 April -71,965 -1,059,510 -32,850 -7,670 -24,850 -1,196,845
Current Service Cost -1,699 -6,150 -240 -6,150 -340 -14,579
Transfers In -20 -60 -80
Interest Cost -2,418 -37,020 -1,170 -430 -870 -41,908
Contributions from scheme participants -519 -1,960 -100 -2,520 -5,099
Re-measurement gain (loss):
actuarial (gains)/losses arising from
changes in demographic assumptions2,113 14,890 60 1,160 18,223
Actuarial gains and losses underlying the
present value of the retained
settlement
actuarial (gains)/losses arising from
changes in financial assumptions-14,664 -214,820 -15,490 830 -3,860 -248,004
actuarial (gains)/losses on liabilities -
experience2,491 4,000 -10 -7,430 400 -549
Past Service Cost -6 -6
Losses/(gains) on curtailments
Liabilities assumed on entity
combinations
Benefits paid 2,242 41,760 190 1,170 45,362
Liabilities extinguished on settlements 0
Closing Balance 31 March -84,425 -1,258,810 -49,630 -23,430 -27,190 -1,443,485
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
2017/18 Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme Total
2017/18 2017/18 2017/18 2017/18 2017/18 2017/18
£'000 £'000 £'000 £'000 £'000 £'000
Opening Balance at 1 April -84,425 -1,258,810 -49,630 -23,430 -27,190 -1,443,485
Current Service Cost -2,208 -6,320 -200 -10,310 -330 -19,368
Transfers In 0
Interest Cost -2,179 -32,910 -1,320 -790 -710 -37,909
Contributions from scheme participants -495 -1,550 -110 -2,770 -4,925
Re-measurement gain (loss): 0
actuarial (gains)/losses arising from
changes in demographic assumptions32,130 1,150 1,550 990
35,820
Actuarial gains and losses underlying the
present value of the retained
settlement 0
actuarial (gains)/losses arising from
changes in financial assumptions-1,526 -29,640 -3,800 -180 -220
-35,366
actuarial (gains)/losses on liabilities -
experience-319 4,660 -1,890 130 -2,500
81
Past Service Cost -182 -880 -1,062
Losses/(gains) on curtailments 0
Liabilities assumed on entity
combinations 0
Benefits paid 1,806 42,780 140 1,210 45,936
Liabilities extinguished on settlements
Closing Balance 31 March -89,528 -1,250,540 -55,660 -35,800 -28,750 -1,460,278
Main Financial Statements
Page 107 of 126 WYFRA
Local Government Pension Scheme Assets comprised: 2016/17
Fair Value of scheme assets
2016/17
£'000
Cash 172,298
Equity Instruments by Industry Type:
Basic Materials 508,096
Total Financial Instruments 14,931
Consumer Goods 1,490,969
Consumer Services 904,368
Financials 2,225,597
Health Care 788,756
Industrials 1,138,425
Oil and Gas 665,821
Technology 385,950
Telecommunications 322,985
Utilities 295,073
8,740,971
Bonds:
Government Bond 1,212,644
Index Linked Bonds 656,523
Covertible Bonds 2,359
1,871,526
Property:
Property Unit Trusts 586,366
586,366
Private Equity:
Private Equity 659,799
Private Equity Infrastructure 289,850
949,649
Other Investment Funds:
Unit Trusts and Oeics 764,171
Hedge Funds 254,255
1,018,426
Listed Alternatives:
Listed Alternatives UK 189,406
189,406
Direct Property 7,000
Total Assets 13,535,642
Main Financial Statements
Page 108 of 126 WYFRA
2017/18
Basis for Estimating Assets and Liabilities
Fair Value of
scheme assets
2017/18
£'000
Cash 263,630
Equity Instruments by Industry Type:
Basic Materials 238,566
Total Financial Instruments 0
Consumer Goods 1,445,017
Consumer Services 863,747
Financials 2,241,787
Health Care 768,581
Industrials 1,417,794
Oil and Gas 687,868
Technology 438,612
Telecommunications 276,243
Utilities 256,093
8,634,309
Bonds:
Government Bond 872,138
Index Linked Bonds 659,866
Covertible Bonds 2,383
Corporate bonds 502,630
2,037,017
Property:
Pool properties 606,445
606,445
Private Equity:
Private Equities 1,182,997
Private Equity Infrastructure 0
1,182,997
Other Investment Funds:
Unit Trusts and Oeics 185,904
Hedge Funds 644,161
830,066
Listed Alternatives:
Listed Alternatives UK 210,122
210,122
Direct Property 7,250
Currencies 26,660
Total Assets 13,798,497
Main Financial Statements
Page 109 of 126 WYFRA
The significant assumptions used by the actuary have been:
Local Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) Compensation
2016/17 Pension Pension Pension Pension
Scheme Scheme Scheme Scheme
2016/17 2016/17 2016/17 2016/17
Long term expected rate of return on
assets in the scheme :
%
Equity investments *
Bonds *
Other *
*Information can be obtained from www.wypf.gov.uk
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Mortality assumptions : Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme
2016/17 2016/17 2016/17 2016/17 2016/17
£'000 £'000 £'000 £'000 £'000
Longevity at 65 for current pensioners : 22.1 22.4 22.4 22.4 22.4
- Men 25.2 22.4 22.4 22.4 22.4
- Women
Longevity at 65 for future pensioners : 23.0 24.7 24.7 24.7 24.7
- Men 27.0 24.7 24.7 24.7 24.7
- Women
% % % % %
Rate of inflation RPI 3.10 3.5 3.5 3.5 3.5
Rate of inflation CPI 2.00 2.35 2.35 2.35 2.35
Rate of increase in salaries 3.25 4.2 4.2 4.2 4.2
Rate of increase in pensions 2.00 2.35 2.35 2.35 2.35
Rate of increase to deferred pensions
Rate for discounting scheme liabilities 2.60 2.65 2.65 2.65 2.65
Pensions account revaluation rate 2.00
Take up option to convert annual
pension into retirement lump sum.75.0
2017/18
Information can be obtained from www.wypf.gov.uk
Local Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) Compensation
2017/18 Pension Pension Pension Pension
Scheme Scheme Scheme Scheme
2017/18 2017/18 2017/18 2017/18
Long term expected rate of return on
assets in the scheme :
%
Equity investments *
Bonds *
Other *
Main Financial Statements
Page 110 of 126 WYFRA
Local Firefighters Firefighters Firefighters Firefighters
Government 1992 (FPS) 2006 (NFPS) 2015 (FPS) Compensation
Mortality assumptions : Pension Pension Pension Pension Pension
Scheme Scheme Scheme Scheme Scheme
2017/18 2017/18 2017/18 2017/18 2017/18
£'000 £'000 £'000 £'000 £'000
Longevity at 65 for current pensioners : 22.1 21.9 21.9 21.9 21.9
- Men 25.3 21.9 21.9 21.9 21.9
- Women
Longevity at 65 for future pensioners : 23.1 23.9 23.9 23.9 23.9
- Men 27.1 23.9 23.9 23.9 23.9
- Women
% % % % %
Rate of inflation RPI 3.20 3.45 3.45 3.45 3.45
Rate of inflation CPI 2.10 2.3 2.3 2.3 2.3
Rate of increase in salaries 3.35 4.3 4.3 4.3 4.3
Rate of increase in pensions 2.10 2.3 2.3 2.3 2.3
Rate of increase to deferred pensions
Rate for discounting scheme liabilities 2.60 2.55 2.55 2.55 2.55
Pensions account revaluation rate 2.10
Take up option to convert annual
pension into retirement lump sum.75.0 75.0 75.0 75.0 75.0
The estimation of the defined benefit obligations is sensitive to the actuarial assumptions
set out in the table above. The sensitivity analysis below has been determined based on
reasonably possible changes of the assumptions occurring at the end of the reporting period
and assumes for each change that the assumptions remain constant. The assumptions in
longevity, for example, assume that life expectancy increases or decreases for men and
women. In practice, this is unlikely to occur, and changes in some of the assumptions may
be interrelated. The estimations in the sensitivity analysis have followed the accounting
policies for the scheme, i.e. on an actuarial basis using the projected unit credit method. The
methods and types of assumptions used in preparing the sensitivity analysis below did not
change from those used in the previous period.
Local Government Pension Scheme
Local Government Pension Scheme Increase in Decrease in
assumption assumption
£000's £000's
Longevity (increase or decrease in 1
year)86,400 -91,782
Rate of general increase in salaries
(increase or decrease by 0.1%)89,465 -88,707
Rate of increase in pensions ( increase
or decrease by 0.5%)90,380 -87,808
Rate for discounting scheme liabilities
(increase or decrease by 1.9%)87,434 -90,765
Impact on the Defined Benefit obligation in the scheme
Main Financial Statements
Page 111 of 126 WYFRA
Firefighters Pension Scheme 1992
Firefighters Pension Scheme 2006
Firefighters Pension Scheme 1992 Increase in Decrease in
assumption assumption
£000's £000's
Longevity (increase or decrease in 1
year)31,000 -31,000
Rate of general increase in salaries
(increase or decrease by 0.5%)6,000 -6,000
Rate of increase in pensions ( increase
or decrease by 0.5%)94,000 -94,000
Rate for discounting scheme liabilities
(increase or decrease by 0.5%)-113,000 113,000
Impact on the Defined Benefit obligation in the scheme
Firefighters Pension Scheme 2006 Increase in Decrease in
assumption assumption
£000's £000's
Longevity (increase or decrease in 1
year)1,000 -1,000
Rate of general increase in salaries
(increase or decrease by 0.5%)5,000 -5,000
Rate of increase in pensions ( increase
or decrease by 0.5%)6,000 -6,000
Rate for discounting scheme liabilities
(increase or decrease by 0.5%)-9,000 9,000
Impact on the Defined Benefit obligation in the scheme
Main Financial Statements
Page 112 of 126 WYFRA
Firefighters Pension Scheme 2015
Asset and Liability Matching (ALM) Strategy
West Yorkshire Pension Fund who manage the pension fund on our behalf do not currently
have any formal asset liability matching strategies such as annuities or longevity swaps to
manage risks. West Yorkshire Pension Fund reviews the mix of assets held after each
triennial valuation, to ensure there is an appropriate balance between the expected return
from those assets and the risk that outcomes will not meet expectations.
Impact on the Authority's Cash Flows: Local Government Pension Scheme The objectives of the scheme are to keep employers contributions at a constant rate as
possible. The Authority has agreed a strategy with the pension fund to achieve a funding
level of 100% over the longer term. The management of the pension cash flows is set out in
West Yorkshire Pension Fund's Funding Strategy Statement which identifies how employers
pension liabilities are best met going forward, supports the regulatory requirement to
maintain stable employer contribution rates and makes a prudent long term view of funding
those liabilities.
The Local Government Pension Scheme will need to take account of the national changes to the scheme under the Public Pensions Act 2013. Under the Act, the Local Government Pension Scheme in England and Wales and the other main existing public service schemes may not provide benefits in relation to service after 31 March 2014 (or service after 31 March 2015 for other main existing public service pension schemes in England and Wales). The Act provides for scheme regulations to be made within a common framework, to
Firefighters Pension Scheme 2015 Increase in Decrease in
assumption assumption
£000's £000's
Longevity (increase or decrease in 1
year)1,000 -1,000
Rate of general increase in salaries
(increase or decrease by 0.5%)3,000 -3,000
Rate of increase in pensions ( increase
or decrease by 0.5%)3,000 -3,000
Rate for discounting scheme liabilities
(increase or decrease by 0.5%)-6,000 6,000
Impact on the Defined Benefit obligation in the scheme
Main Financial Statements
Page 113 of 126 WYFRA
establish new career average revalued earnings schemes to pay pensions and other benefits to certain public servants. Firefighters Pension Scheme 1992, 2006 & 2015 The Authority receives a top up grant from Central Government which reimburses the cost
of the Firefighters Pension Scheme 1992, the New Firefighters Pension Scheme 2006 and
the 2015 Firefighters Pension Scheme. This grant is received in July which is based on 80% of
the estimated pension’s deficit for 2017/18 plus the remainder of the 2016/17 grant and
any audit adjustments relating to 2015/16. The amount received in July 2017 was £32.0m
which the Authority uses to manage its pension cash flows.
39. Contingent Liabilities At 31 March 2018, the Authority has the following contingent liabilities where it is not possible to quantify the financial implications for the Authority: 1) Public liability claims relating to the period when the Authority's public liability insurers were Independent Insurers, which has gone out of business. The Authority is not aware of any such claims, but it has no insurance against them. 2) In November 2014 the Employment Appeal tribunal ruled that holiday pay should include non-guaranteed overtime. The backdated claims have, however, been limited with the tribunal ruling that workers can only make claims if less than three months since their last incorrect payment, although the claim can be backdated until such time as there is a three month break between underpayments. The Authority is currently assessing the potential impact and will report to the Human Resources Committee with details of the estimated liability. 3) The ruling in the Ville de Nivelles V Rudy Matzak case in February 2018 may have financial implications in the methodology in which we make payments for our retained duty system. The European Court Judge ruled that limitations imposed on Matzak by having to respond to the fire station within 8 minutes, limits his ‘personal and social interests’ and that his on call must be considered working time. A retained firefighter in West Yorkshire must be available to respond to an emergency call within a specified time. The judgement is currently being assessed by the Fire Legal Network with a view to seeking leading council opinion. Until the outcome of the opinion is reached the financial consequences cannot be quantified.
Main Financial Statements
Page 114 of 126 WYFRA
4) Guaranteed minimum pension (GMP) is a portion of pension that was accrued by pension
scheme members who were contracted out of the State second pension scheme prior to 6th
April 1997. At the present there is an inequality of GMP benefits between male and female
members. The government issued a consultation in November 2016 entitled ‘Consultation
on indexation and equalisation of GMP in public service pension schemes’ the consultation
response was issued in January 2018. HM Treasury are currently considering the responses
in order to decide whether on a long term solution to GMP. Indexation and equalisation can
be implemented. Until it is known how this solution will be achieved, the impact on pension
liabilities is uncertain, however it is likely that it will trigger past service costs and the
Actuaries’ view that any further potential increase in liabilities be disclosed as a contingent
liability at this time.
WYFRA PENSION ACCOUNT
Page 115 of 126 WYFRA
West Yorkshire Fire and Rescue Authority Pension Account
The Authority administers and pays firefighters’ pensions and is required to manage a Firefighters’
Pension Fund Account. The fund is an unfunded pension scheme and consequently has no
investment assets. It provides for the payment of defined retirement benefits to members, or their
dependants, from firefighters’ and employer contributions. The fund is topped up and balances to
nil as necessary by Government grant if contributions are insufficient to meet the cost of retirement
benefits.
The Firefighters’ Pension Fund has the legal status of a pension fund which was established under
the Firefighters’ Pension Scheme (Amendment) (England) Order 2006.
Overview of the Pension Fund
2016/17 2017/18
£'000 £'000
-5,842 -5,420
-364 -403
-4,640 -4,395
-10,846 -10,218
-80 -19
34,019 35,208
7,909 7,883
0 0
31,002 32,854
-31,002 -32,854
0 0
Transfers in
Individual transfers in from other schemes
Benefits Payable
Pensions
Lump Sums
Payments to and on account leavers
Individual transfers out to other schemes
Net amount payable for the year
Top Up Grant payable by the Government
Contributions Receivable
From employer
Normal
Ill Health
From members
2,640 3,574
-87 -54
Contributions Holiday Debtor from Home Office 24
25 12
-153 -716
-2,425 -2,840
0 0
Top Up Grant receivable from Government
Pensionable Pay Creditor to Home Office
Employee paid but not due
Unpaid pension benefits
Pension payments due but not paid
Cash (Overdrawn)
Net current assets and Liabilities
WYFRA PENSION ACCOUNT
Page 116 of 126 WYFRA
The Firefighters’ Pension Account has the legal status of a pension fund which was established under
the Firefighters’ Pension Scheme (Amendment) (England) Order 2006.
There are three Pension Schemes currently administered by the Authority:
(i) i)Firefighters Pension Scheme 1992 (FPS) operated under the Firefighters Pension Scheme (Amendment) (No 2) (England) Order 2006 ii)New Firefighters Pension Scheme 2006 (NFPS) operated under the Firefighters Pension Scheme(England) Order 2006 iii)The Firefighters Pension Scheme 2015 as set out in the Firefighters Pension Scheme (England) Regulations 2014 (SI 2014/2848)
In addition to the three schemes above the Authority also operates a Retained Firefighters Modified
Pension Scheme. This scheme was established in response to the settlement between the National
Joint Council (NJC) for Local Authority Fire and Rescue Services and the Fire Brigades Union (FBU)
in relation to the Part Time (Prevention of Less Favourable Treatment Regulations) 2000, reached
in March 2011.
The Government during 2014/15, introduced the terms of the Retained Firefighters' Pension
Settlement that offers pension entitlement for all employees who were employed as Retained
firefighters between 1st July and 5 April 2006 inclusive. The pension benefits are incorporated
within the Pension Scheme 2006 (NFPS). It does not constitute a new scheme, rather a modified
section of the NFPS with different benefits.
The pension schemes are unfunded meaning that there are no investment assets built up to meet the pension liabilities and cash has to be generated to meet actual payments as they fall due. Entrants to the service since 1st April 2015 are eligible to join the 2015 Scheme, a new career average scheme with a normal retirement age of 60. Existing members were either transferred to the 2015 scheme on the 1st April 2015 or will transition to the 2015 scheme at a later date this is referred to as tapered protection. In the case of firefighters who were within 10 years of retirement on 1st April 2012 will remain in either the 1992 (FPS) or the 2006 (NFPS), both of which are final salary schemes. Pensionable Pay Following the ruling under the Norman v Cheshire case the Authority has agreed that some allowances payable to employees who meet pre-determined criteria are pensionable. The Authority has back dated pension contribution owing for 6 years which has resulted in a total liability of £475k. The pension top up grant received from the Government will be reduced by £54k of contributions recovered in the year. West Yorkshire Pension Fund administers and pays firefighters’ pensions on behalf of the Authority
under the arrangement of a service level agreement. The account is an unfunded pension scheme
and has no investment assets to support its liabilities. It provides for the payment of defined
retirement benefits to members, or their dependants, from firefighter and employer contributions
during the year and the deficit is topped up annually by Central Government in the form of a grant.
This means that the Pension Fund Account balances to nil.
WYFRA PENSION ACCOUNT
Page 117 of 126 WYFRA
Employees’ and employer’s contribution levels are based on percentages of pensionable pay set
nationally by Central Government and are subject to revaluation by the Governments Actuary
Department.
Membership of the Pension Fund as at 31st March 2018 is as follows:
The Pension Fund Statement does not take account of the liabilities for future retirement benefits;
these are recognised in the main accounts of the Authority in Note 38 on defined benefit pension
schemes.
Accounting Policies The Pension Fund Accounts for the year ended 31st March 2018 are presented in the format as laid
down in the Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 issued
by the Chartered Institute of Public Finance and Accountancy. The accounting policies adopted for
the production of the Pension Fund Account follow those that are used to prepare the Authority’s
primary statements.
Accruals
The accounts have been prepared on an accruals basis.
Benefits and Refunds
The Benefits and Refunds are accounted for in the year in which they become due for payment.
Transfer Values
Transfer values are those sums paid to, or received from, other schemes, and the Firefighters’
Pension scheme outside England, for individuals, and relate to periods of previous pensionable
employment. Transfer values received and transfer values paid are accounted for on a receipts and
payments basis.
2017/18 2017/18 2017/18
1992 (FPS) 2006 (NFPS) 2015 Scheme
Employer 21.70% 11.90% 14.30%
Employee 11% - 17% 8.5% - 12.5% 10% - 14.5%
1992 (FPS) 2006 (NFPS) 2015 Scheme
Contributors 248 29 778
Deferred Pensioners 108 117 62
Pensioners 2315 38 1
Category of Member
WYFRA PENSION ACCOUNT
Page 118 of 126 WYFRA
Current Assets
Debtors are raised for known contributions due at the 31 March 2018 and the top up grant due from
Central Government.
Current Liabilities
Creditors are raised for employer and employee contributions received into the fund before the 31
March 2018.
Long Term Pension Obligations
Details of the Authority’s long term pension obligations in respect of the Firefighters’ Pension
Scheme are in note 38 in the Statement of Accounts.
GLOSSARY OF TERMS
Page 119 of 126 WYFRA
Accruals
The concept that income and expenditure are recognised as they are earned or incurred, not as
money is received or paid.
Amortisation
Written off over a suitable period of time, usually in line with the useful life of an asset.
Asset
An item owned by the Authority, which has a monetary value. Assets can be current or non-current
Current asset – this is consumed or will cease to have value within the next financial year
Non–current asset – provide benefits to the organisation for a period of more than one year
Audit
An independent examination of the Authority’s activities, either internally or externally by our
appointed auditor KPMG
Budget
A statement defining in financial terms the Authority’s plans over a specified period. The budget is
prepared as part of the process of setting the precept.
Capital Expenditure
Expenditure on the acquisition of a fixed asset or expenditure which adds to and not merely
maintains the value of an existing fixed asset.
Capital Adjustment Account
This account provides a balancing mechanism between the different rates at which assets are
depreciated and financed.
Capital Financing Costs
Each service is charged with an annual capital charge to reflect the cost of fixed assets used in the
provision of services.
Capital Financing Requirement
This measures the underlying need to borrow to finance capital expenditure
Capital Receipts
These are the proceeds from the sale of capital assets and are treated in accordance with statutory
provisions.
Commutation
This is where a member of the pension scheme gives up part of their pension in exchange for an
immediate lump sum payment.
Consistency
The concept is that the accounting treatment of like items within an accounting period and from one
period to the next is the same.
GLOSSARY OF TERMS
Page 120 of 126 WYFRA
Contingent Liability
A possible obligation which exists at the balance sheet date, whose existence will be confirmed only
on the occurrence or non-occurrence of one or more uncertain future events. Where a material loss
can be estimated with reasonable accuracy a liability is accrued in the financial statements. If,
however a loss cannot be accurately estimated or its occurrence is not considered sufficiently
probable to accrue it, the obligation is disclosed in a note to the balance sheet. Examples of
contingent liabilities include legal claims pending settlement.
Corporate and Democratic Core
The Corporate and Democratic Core is concerned with the costs of corporate policy making and all
member-based activities, together with costs that relate to the general running of the Authority
including those relating to corporate management, public accountability and treasury management.
Corporate Governance
This is concerned with the Authority’s accountability for the stewardship of resources, risk
management and relationship with the community. It encompasses policies on fraud, whistle
blowing and corruption.
Council Tax Freeze Grant
An amount paid to the Authority to compensate for the loss in grant for not increasing the precept
on the local taxpayers.
Creditors
Amounts owed by the Authority for work done, goods received or services rendered but for which
payment has not been made at the balance sheet date.
Current Service (Pensions) Cost
The current service cost is an estimate of the true economic cost of employing people in a financial
year, earning years of service that will eventually entitle them to a pension when they retire. It
measures the full liability estimated to have been generated in the year (at today’s prices) and is
thus unaffected by whether any fund established to meet liabilities is in surplus or deficit.
Debtors
Amounts of money due to the Authority but are unpaid at the balance sheet date.
Depreciated Replacement Cost
A method of valuation based on the gross cost of replacing the asset/building less an allowance for
depreciation.
Deferred Liabilities
These represent the outstanding obligations on finance leases.
Deferred Premiums and Discounts
These are payment penalties (premiums) or gains (discounts) incurred on certain loans that have
been repaid prematurely. The premium or discount is equal to the present value of the difference
between the remaining payments, which would have been made on the repaid loan, and the
amount that could be received if the sum prematurely repaid was re-advanced at the current rate on
a new loan for a period equal to the unexpired term of the original loan.
GLOSSARY OF TERMS
Page 121 of 126 WYFRA
Defined Benefit Pension Scheme
Retirement benefits are determined independently of the investments of the scheme and employers
have obligations to make contributions where assets are insufficient to meet employee benefits.
Accounted for by recognising liabilities as benefits are earned (i.e. employees work qualifying years
of service), and matching them with the organisation’s attributable share of the scheme’s
investments.
Depreciation
The wearing out, consumption, or other reduction in the useful economic life of a fixed asset,
whether arising from use, effluxion of time or obsolescence through technological or other changes.
De-recognition
The removal of financial assets that have previously been recognised in the balance sheet. A
financial asset is de-recognised when the contractual rights to the cash flows from the financial asset
have been expired or transferred.
Donated Asset
A donated asset is an asset that is transferred to/from the organisation for no monetary exchange.
Earmarked Reserve
An amount set aside for a specific purpose to be expended in future years
Events after the Balance Sheet Date
Events after the Balance Sheet date are those events, favourable and unfavourable, that occur
between the Balance Sheet date and the date when the Statement of Accounts is authorised for
issue (i.e. Authorised by the Authority’s chief finance officer).
Expected Rate of Return on Assets (Pensions)
The expected return is a measure of the return on the investment assets held by the scheme for the
year. It is not intended to reflect the actual realised return by the scheme, but a longer-term
measure, based on the value of assets at the start of the year (taking into account movement in
assets during the year) and an expected return factor.
Fair Value
This is the amount that an asset could be bought or sold for between parties; the current market value of an asset can be evidence that the assets have been valued fairly.
Financial Instruments
This is any contract that gives rise to a financial asset of one entity and a financial liability or equity
of another. The term covers both financial assets (e.g. loans receivable) and financial liabilities (e.g.
borrowings).
Fixed Assets
Tangible assets that yield benefits to the Authority and the services it provides for a period of more
than one year.
GLOSSARY OF TERMS
Page 122 of 126 WYFRA
Funded Pension Scheme
A funded pension scheme is one in which the future liabilities for pension benefits are provided for
by the accumulation of assets held externally to the employer’s business. The Authority’s
employees, with the exception of firefighters, are covered by such a scheme, which is managed on
its behalf by West Yorkshire Pension Fund.
Government Grants
Grants made by Central Government towards either revenue or capital expenditure to support the
cost of the provision of the Authority’s services. These grants may be given specifically towards the
cost of a particular defined service or to support the general revenue spend of the Authority (known
as Revenue Support Grant).
Impairment
This is a specific reduction on an authority’s balance sheet that adjusts the value of the authority’s
assets. This would normally be to reflect the fall in economic prices or a reduction in the economic
benefit of an asset.
Integrated Risk Management Plan (IRMP)
This is a strategy for managing risk within West Yorkshire. It leads to formulation of a strategic
framework for managing community risk. The IRMP is underpinned by a suite of detailed risk
indicators and demographic information which reflects key risks for both the community and
firefighters.
Intangible Assets
These are non-financial fixed assets that do not have a physical substance but are identifiable and
utilised by the Authority through legal or custody rights.
International Financial Reporting Standards
These are the accounting standards that have been adopted from 2010/11 onwards.
Interest Cost (Pensions)
For a defined benefit scheme, the expected increase during the period in the present value of
scheme liabilities because the benefits are one period closer to settlement.
Inventories
The amount of unused or unconsumed stocks held in expectation of future use.
Leasing
A method of financing capital expenditure which allows the Authority to use, but not own an asset.
A third party (the lessor) purchases the asset on behalf of the Authority (the lessee) which then pays
the lessor a rental over the life of the asset.
A finance lease substantially transfers the risks and rewards of ownership of a fixed asset to the lessee. An operating lease is any lease other than a finance lease.
Liability
A liability is where an Authority owes payment to an individual or organisation. There are two types:
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- Current liability – an amount which will become payable or could be called within the next accounting period.
- A deferred Liability – an amount which, by arrangement is payable beyond the next year at some point in the future, or to be paid off by an annual sum over a period of time.
Market Value The monetary value of an asset determined by current market conditions.
Materiality The concept that the Statement of Accounts should include all amounts which, if omitted or
misstated, could be expected to lead to distortion of the financial statements to a reader of the
statements.
Minimum Revenue Provision (MRP)
Represents the statutory minimum amount that must be charged to revenue in each financial year
to repay external borrowings.
Modern Equivalent Asset (MEA)
An asset which provides similar function and equivalent utility to the asset being valued, but which is
of a current design and constructed or made using current materials and techniques.
National non-domestic rates (NNDR)
Business rates are the commonly used name of non-domestic rates, a tax on the occupation of non-
domestic property.
Net Book Value
This is the gross cost of an asset adjusted for depreciation.
Net Current Replacement Cost
The cost of replacing or recreating an asset in its existing condition and in its existing use, i.e. the
cost of its replacement or of the nearest equivalent asset, adjusted to reflect the current condition
of the existing asset.
Net Realisable Value
The open market value of the asset in its existing use (or open market value in the case of non-
operational assets), less the expenses of realising the asset.
Non-Distributed Costs
These are overheads from which no service now benefits. Costs that may be included are certain
pension costs and expenditure on certain unused assets.
Non-Operational Assets
Fixed assets held by the Authority but not directly occupied, used or consumed in the delivery of
services. Examples of non-operational assets are assets that are surplus to requirements, pending
sale or redevelopment.
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Operational Assets
Fixed assets held and occupied, used or consumed by the Authority in the direct delivery of services for which it has either a statutory or discretionary responsibility.
Past Service (Pensions) Costs
Past service costs are a non-periodic cost, arising from decisions taken in the current year, but
whose financial effect is derived from years of service earned in earlier years. Discretionary benefits,
particularly added years, awarded on early retirement are treated as past service costs.
Pensions Account Revaluation Rate
In a career average revalued earnings scheme each member builds up a pension based on their
pensionable pay for that year. The pensions earned each year are added to the member’s pension’s
account which is then adjusted for the cost of living CPI inflation. The pensions account revaluation
rate assumptions is set to be equal to the CPI inflation assumption and is used to estimate the future
value of the pension account.
Precept
This is a charge levied by a local authority which is collected on its behalf by another authority. It
does this by adding the precept to its own Council Tax and paying over the appropriate cash
collected.
Provision
An amount set aside to provide for a liability, which is likely to be incurred, but the exact amount
and the date on which it will arise is uncertain.
Prudence
The concept that revenue is not anticipated but is recognised only when it is realised in the form of
cash or of other assets, the ultimate cash realisation of which can be assessed with reasonable
certainty.
Public Works Loan Board (PWLB)
This is a Central Government Agency which provides loans for one year and above to Authorities at
interest rates only slightly higher than those at which the Government itself can borrow.
Related Parties
Two or more parties are related parties when at any time during a financial period:
one party has direct or indirect control of the other party; or
the parties are subject to common control from the same source; or
one party has influence over the financial and operational policies of the other party to an
extent that the other party might be inhibited from pursuing at all times its own separate
interests; or
The parties, in entering a transaction, are subject to influence from the same source to such
an extent that one of the parties to the transaction has subordinated its own separate
interests.
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Reserves
A reserve is an amount set aside for a specific purpose in one financial year and carried forward to
meet expenditure in future years.
Revaluation Reserve
This reserve recognises revaluation gains recognised since April 2007.
Revenue Expenditure
This is money spent on the day to day running costs of providing services. It is usually of a recurring
nature and produces no permanent asset.
Service Reporting Code of Practice (SeRCOP)
SeRCOP replaced the previous Best Value Accounting Code of Practice (BVACOP). SeRCOP applies to
all local authority services throughout the United Kingdom from 1 April 2014 for the preparation of
Budgets, Performance Indicators and Statements of Accounts. SeRCOP is reviewed annually to
ensure that it develops in line with the needs of modern local government, Transparency, Best Value
and public services reform. This is increasingly important as Transparency initiatives are expected to
become more sophisticated and to evolve constantly.
Settlements and Curtailments (Pensions)
Settlements and curtailments are non-periodic costs. They are events that change the pension
liabilities but are not normally covered by actuarial assumptions, for example a reduction in
employees through a transfer or termination of an operation.
Unfunded Pension Scheme
An unfunded pension scheme is one in which liabilities for pension benefits are charged to the
employer’s revenue account in the year in which they arise and are not financed from investments
held. The Authority operates such a scheme for its firefighters.
Useful Life
This is the period over which the Authority will derive benefits from the use of a fixed asset.
Page 126 of 126 WYFRA
A Wood CPFA
Chief Finance &
Procurement Officer
Oakroyd Hall
Birkenshaw
Bradford
BD11 2DY
Tel: 01274 682311